Volcano Kept at Near-Term Simmer

Volcano Corporation (VOLC - Analyst Report) designs, develops, manufactures, and commercializes a broad suite of intravascular ultrasound, or IVUS, and functional measurement, or FM, products that it believes enhance the diagnosis and treatment of vascular and structural heart disease.

VOLC reported Q3 EPS that beat our estimate by $0.03 on revenue that exceeded our forecast. We increased our FY08 revenue and EPS estimates and also increased our FY09 revenue estimate. Management revised its GAAP and non-GAAP guidance for FY08.

The company continues to gain IVUS market share and help expand the IVUS market with the help of new products and product enhancements that are introduced and support from partners in marketing and distribution agreements. Furthermore, VOLC has been expanding its marketing programs and sales force.

Our price target is based on a price-to-revenue multiple of roughly 4.3x our 2009 revenue estimate. Our Hold recommendation is maintained.

Read the full analyst report on VOLC