Volcano shares slide to 3-year low on weak outlook

Volcano shares fall to 3-year low on announcement of weak 2013 profit and revenue predictions

Associated Press

NEW YORK (AP) -- Volcano Corp. shares tumbled to a 3-year low Friday after the medical device maker issued a lower-than-expected 2013 guidance.

THE SPARK: Volcano said late Thursday that it expects to post an adjusted 2013 profit of 8 cents to 11 cent per share on $406 million to $412 million in revenue.

Analysts, on average, expected a profit of 29 cents per share on $423.5 million in revenue, according to FactSet.

THE BIG PICTURE: The San Diego-based company makes a variety of tools used in the treatment of vascular and structural heart disease. The company also on Thursday announced a lower-than-expected fourth-quarter profit.

Volcano earned $2.5 million, or 4 cents per share, while analysts expected a profit of 9 cents per share. Revenue increased 10 percent to $102.5 million, beating Wall Street predictions of on $102.1 million.

THE ANALYSIS: Jefferies analyst Raj Denhoy kept his "Buy" rating on the stock but added there are "lots of questions" concerning the outlook and the company's strategy.

"For 2013, revenue growth is now expected to be 11 to 12 percent, down from the 11 to 13 percent given on the third-quarter call," the analyst wrote in a report. "And while the cut is a minor one, it is emblematic of Volcano still trying to define for investors what its growth profile looks like in an environment ... where new products remain at least a year away."

He trimmed his price target to $28 from $32.

THE SHARES: Down $3.51, or 14 percent, to $21.16 in heavy morning trading, after falling as low as $20.76 earlier in the session, marking its lowest price since early 2010.

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