(VOLC) Volcano Corporation Expects Higher Revenues

January 15th, 2010

Volcano Corporation (VOLC) recently announced that it expects total revenues to increase 33% year over year to $228 million in fiscal 2009. This is above the company’s previously issued revenue guidance of $218 ? $223 million. Meanwhile, fourth quarter revenues are expected in the range of $71 million, reflecting a year over year growth of 44%.

The company said that the results for the full year and fourth quarter of 2009 include revenues of approximately $18 million and $5.8 million, respectively, from Axsun Technologies Inc., which was acquired by Volcano in late 2008.

Volcano attributed the strong performance to growth across its core businesses and key geographic areas. The company stated that capital equipment sales witnessed growth in the U.S. and Europe. The company also benefited from its direct sales effort in Japan.

We view Volcano’s decision to sell its products directly in Japan, which is the largest intravascular ultrasound (IVUS) market in the world, as a positive. While the company used to sell its products through distributors in Japan previously, it has recently started selling directly through an internal sales force. This direct marketing should allow Volcano to realize end market prices for its products.

The establishment of a direct sales force should also allow the company to provide more focused service and support to the IVUS market in Japan. We believe the transition to a direct sales force will boost top- and bottom-line growth in the long run.

The company intends to present full results for the fourth quarter and full year 2009 and guidance for 2010 in early March. We currently have a Neutral recommendation on Volcano.

Zacks Investment Research

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Read more on Volcano, Investing in Japan, Revenue at Wikinvest

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