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Recently, Volcano Corporation (VOLC - Analyst Report) disclosed its plan to feature its innovative technologies, including the company’s Fractional Flow Reserve (FFR) and iFR (Instant Wave-Free Ratio) technologies at the EuroPCR 2013 in Paris.

At the EuroPCR, Volcano will also launch its iFR modality and CORE Integrated System. The company will highlight its Verrata Pressure Guide Wire at the Paris conference. The Verrata Wire is not yet commercially available in the U.S. and Europe as its 510(k) clearance and CE Mark approval are pending. Additionally, Volcano will display currently available as well as future offerings from its line of physiology, imaging and multi-modality systems.

As per management, the research and development efforts and innovation reflects Volcano’s undertaking in clinical and technological advancement. The company will also highlight latest clinical data associated with its functional management technologies. Volcano’s Verrata Wire will be the company’s fifth novel guide wire in five years, reflecting the company’s sharp focus on portfolio expansion.

Our Take

We are encouraged by Volcano’s recent innovation. Notably, pipeline development at the company is progressing well. Volcano has been working on expanding its portfolio with the recent launch of many products. This is expected to boost its revenues in the long term.

While we are impressed with the company’s pipeline development program, margins still remain under pressure due to the duplicity of operations in its new facility with the existing one. Moreover, earlier this month, Volcano reported a mixed quarter in a challenging scenario. The weakness in yen and slowdown in percutaneous interventional (PCI) volumes were major headwinds in the last quarter. Moreover, the company expects the challenges to persist through 2013 as reflected in the conservative guidance for the ongoing year.

Accordingly, the stock carries a Zacks Rank #3 (Hold). While we remain on the sidelines for Volcano, Natus Medical Inc. (BABY - Snapshot Report), carrying a Zacks Rank #1 (Strong Buy) warrants a look. Heartware International Inc. (HTWR - Snapshot Report) and Intuitive Surgical Inc. (ISRG - Analyst Report), carrying Zacks Rank #2 (Buy) are also worth considering.

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