UPDATE: Canaccord Genuity Upgrades Volcano Corporation on Positive Trends

In a report published Tuesday, Canaccord Genuity analyst Jason R. Mills upgraded Volcano Corporation VOLC from Hold to Buy, and raised the price target from $21.00 to $26.00.

In the report, Canaccord Genuity noted, “Solid or improving revenue growth trends and margin expansion are tried and true drivers of small-cap med-tech multiples. However, since October 2010, VOLC has lost over 20% of its value amid declining growth (admittedly from a high level) and inconsistent gross margin performance, which drove multiple contraction to its current discount relative to the broad comp group. However, improving trends in the core IVUS business, easing Y/Y comps, strong margin expansion potential via manufacturing transition to Costa Rica in 2014, and several catalysts on the horizon (e.g., new products, clinical data), portend a more favorable risk/reward profile in the stock at current trading levels. Consequently, we upgrade our rating to BUY from Hold, and increase our target to $26 from $21, applying an in-line comp group EV/sales multiple of 3.1x.”

Volcano Corporation closed on Monday at $20.62.