Syncor Stock Soars on Optimism Over Firm’s New Ventures

Shares of Syncor International Corp. have doubled since April as the medical products company gained favor on Wall Street by diversifying into foreign markets and moving to crack the competitive medical imaging business.

Syncor stock rose 12%, or $6.06, to close at $55.13 Thursday, hitting an all-time high for the Woodland Hills-based company. Its shares have risen 89% since Jan. 1.

“This is a company that is on a tear right now,” said Larry Smith, an analyst with Sutro & Co. in New York.

Syncor, which sells a radioactive-isotope-laced drug used in heart disease imaging, radioactive seeds used to treat prostate cancer and other medical products, controls about half of the $1-billion radiopharmaceutical market.

Interest in the company began to accelerate after April 25, when Syncor reported that profit rose 49% to $7.5 million for the quarter ended March 31, compared to the same period a year earlier. Sales rose 20% to $149 million.

Its fast-growing profit, about double Wall Street’s expectations, provided validation that Syncor’s diversification strategy was paying off, Smith said.

Worried that its torrid growth in the radiopharmaceutical business would cool as it gained market share, Syncor has sought to add business lines in recent years.

It now owns 33 medical imaging centers and manages and partly owns nine others.

Through its Syncor Overseas subsidiary, it also owns or operates 17 nuclear pharmacy centers in 13 countries.

“The market potential overseas is equally as large as it is in the United States,” said Robert Funari, Syncor’s chief executive.

Funari said the move into medical imaging, a field in which other companies have stumbled, was controversial on Wall Street. But Syncor has thus far proved it can operate the centers profitably, posting operating income of about $800,000 for the quarter on $17.9 million in revenue. Sales at imaging centers opened at least one year--a key measure of growth--are rising at double-digit rates, helped by the company’s efforts to keep the expensive imaging machines operating throughout business hours.

Earlier this week, Syncor announced an agreement with GE Medical Systems to distribute Syncor’s radioisotopes to health providers. In return, Syncor will buy several types of advance medical scanners and cyclotrons from GE.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Syncor Surges

Shares of Syncor International

have doubled since mid-April,

when the Woodland Hills-based medical products company

reported

strong growth

in profit and

sales. Weekly

closes and

latest:

Thursday:

$55.13,

up $6.06

Source: Bridge News