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How Growth Could Erupt At Volcano


Worries about drug-coated stents are drawing attention to Volcano (VOLC), a maker of intravascular ultrasound (IVUS) catheters and devices for diagnosis and treatment of heart disease. Volcano went public in June at 8 and has galloped to 18.81. The company is poised "for explosive growth because of its leading technology," says Robin Manners West of the New Mexico State Investment Council, which owns shares. An ivus device shows where stents are placed in an artery and points up when they are improperly positioned, potentially causing thrombosis. On Dec. 7, Volcano, working with Stanford University and the Cardialysis & Cardiovascular Research Foundation, agreed to supply IVUS gear free of charge for clinical trials of stents. The goal is to see the long-term safety of current and next-generation stents. West figures Volcano "will attract a buyer before long." It has teamed up with other companies, including Medtronic (MDT), which owns 2.3%. Johnson & Johnson (JNJ) owns 4.6%. West predicts the stock will climb to 25 this year. Jose Haresco of Merriman Cuhan Ford (MEM), who rates it a buy, sees Volcano turning profitable in 2008, with 30 cents a share on sales of $136 million, vs. an estimated 1 cents-a-share loss in 2007 on $118 million. In 2009, he expects 51 cents on $151.6 million.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial


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