On Jan 28, we retained
Varian Medical Systems
), an oncology and X-Ray products company, at Neutral after the
company beat Zacks Consensus Estimates for revenues and earnings
for the fiscal first quarter. The results came despite a
contraction in oncology net orders for Varian outside North
Why the Retention?
Varian Medical posted first-quarter fiscal 2013 adjusted net
earnings of 89 cents per share, beating the Zacks Consensus
Estimate of 86 cents per share and surpassing the year-ago
earnings of 79 cents a share. Revenues in the fiscal first
quarter increased 8% year over year to $678.4 million, beating
the Zacks Consensus Estimate of $676 million. Sale of oncology
products was strong in North America while X-Ray products
worldwide sold at a brisk pace.
Following the release of the fiscal first quarter results on
Jan 23, the Zacks Consensus Estimate for fiscal 2013 has moved
down by just a penny to $4.12 while the same for 2014 has
remained stagnant at $4.66.
Moving ahead, Varian continues to expect revenues to
moderately grow by 8% to 9% for fiscal 2013. Net earnings for
fiscal 2013 have been marginally revised in the band of $4.08 to
$4.16 (earlier $4.06 and $4.16) per share. For second-quarter
fiscal 2013, the company envisions sales to grow roughly 5% to 6%
year over year. Varian expects net earnings in the range of 98
cents to $1.03 per share, including a restructuring charge for
the second quarter.
Varian is a leading manufacturer of integrated radiotherapy
systems for cancer treatment, and a premier supplier of X-ray
tubes for diagnostic imaging applications. The company operates
in a technology-driven environment where success depends on the
use of new technology, product development and upgrades. In the
radiation oncology market, Varian competes with
The company is poised to increase its market share in
radiation oncology. It currently enjoys a healthy demand for its
coveted TrueBeam technology, which has meaningfully contributed
to its net order oncology growth. Varian's TrueBeam was designed
to treat tumors with beams of high speed and precision. It
incorporates several technological innovations such as patient
positioning and managing his/her motion. Given its high intensity
nature, TrueBeam can dispense strong dosage over twice as fast as
that possible with earlier equipment.
Truebeam currently constitutes over 50% of Varian's high
energy accelerator orders. Since its inception in April 2009,
Varian has booked more than 690 orders for TrueBeam, of which
over 380 installations have been completed or represent work in
progress. In January 2013, Varian revealed FDA 510(k) clearance
for its Edge Radiosurgery Suite. Given the demographic trends
across the globe, this integrated system might be a breakthrough
in cancer treatment.
Moreover, Varian continues to post decent results despite the
contagion of economic problems in Europe and sustained softness
in certain end markets. It enjoys a strong balance sheet marked
by low debt and sizeable cash. The company also periodically
deploys capital to boost investor confidence via share
However, Varian competes with larger players in a
technology-intensive industry. Further, uncertainties stemming
from health care reform and a still weak hospital capital
spending environment across many developed countries, especially
in Europe, are significant challenges.
Other Stocks to Consider
The stock carries a Zacks Rank #3, which translates into a
short-term Hold rating.
Cantel Medical Corp.
) are Zacks Rank #1 (Strong Buy) stocks which are expected to do
ACCURAY INC (ARAY): Free Stock Analysis
CANTEL MED CORP (CMN): Free Stock Analysis
CYBERONICS INC (CYBX): Free Stock Analysis
VARIAN MEDICAL (VAR): Free Stock Analysis
To read this article on Zacks.com click here.