Volcano shares dive on lowered guidance

February 25, 2013 by Brian Johnson

Wall Street pounds shares of Volcano Corp. after the medical device company lowers its 2013 guidance following its 4th quarter earnings release.

Volcano logo

Shares of Volcano (NSDQ:VOLC) were down nearly 10% on Wall Street in late-day trading Friday, after the medical device company revised its sales and earnings guidance downwards, a day after a tough 4th-quarter earnings release.

The San Diego, Calif.-based firm said it expects to turn 8¢-11¢ earnings per share on $406 million-$412 million in sales, far below the 29¢ EPS on $423.5 million analysts were projecting based on Volcano's Q4 earnings release.

Volcano did not give any reason reason for the revision in a regulatory filing.

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Several Investment houses downgraded VOLC stock based on the revised guidance, including Goldman Sachs, which changed its rating from "conviction buy" to "neutral."

"We see Volcano as a 'show me' story, having missed sales 3 of the last 4 quarters and guiding below Street 3 consecutive times. Further, there are limited clinical/regulatory catalysts to drive an outer year inflection point," the bank wrote in a note to investors last week.

On Thursday, Volcano officials reported profits of $2.5 million, o 5¢ earnings per share, on $102 million in sales during the 3 months ended Dec. 31, 2012, down significantly from $29.4 million, or 56¢ EPS, on $92.7 million in sales during the same period in 2011.

For the full year, Volcano's earnings plunged to $8 million, or 15¢ EPS, on $382 million in sales, for a profit decline of some 79% compared with 2011.

VOLC shares closed down 8.3% Feb. 22 at $22.63 apiece.