Volcano Corporation (San Diego, CA) may be looking for a suitor as its stock has underperformed the expectations of many analysts. The company’s stock has lagged behind the S&P 500 and the Health Care Equipment & Supplies index in the past year. Compared to the S&P 500's performance over the last year, the company’s stock has underperformed by a margin of 30.26%. Its earnings per share have fallen nearly five fold compared to its quarterly performance on year ago. The company announced a wave of layoffs earlier in the year.
The company specializes in intravascular ultrasound, heart-disease diagnostics tools, and cardiac catheterization.
Engaged Capital, a private equity firm, owns a significant portion of Volcano Corp. According to statements made to the press, the firm is recommending patience, stating that potential buyers may be willing to pay more later on. That said, analysts working for Eagle Asset management, another private equity firm, issued a buy recommendation for potential acquirers, stating that the lagging stent market has helped to drive down share prices of the company.
In early November, Volcano revealed to the public that Engaged Capital had purchased one-twentieth of outstanding shares at the company. Once the firm acquired a stake in the company, it made a series of requests for structural changes. These included a share buyback of $200 million, a lower emphasis on acquisitions and changes to management compensation.
