Varian Medical Systems
) disclosed the successful consolidation of its Eclipse treatment
planning system with Elekta linear accelerators. This unique
integration of software and equipment will enable Varian to
provide VMAT treatments at Swiss-based Kantonsspital St. Gallen.
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Kantonsspital St. Gallen is a well-regarded public hospital in
Switzerland. More than 1,200 cancer patients from north-eastern
Switzerland receive treatment at the hospital annually. The
consolidation has already been used for advanced patient
treatment. The first patient to be treated with the integrated
solution at the Swiss hospital was an 83-year-old patient
suffering from non-Hodgkin's lymphoma.
This should expand Varian's solid foothold in Switzerland. As the
company expands its installed base in the country, we expect
revenues to grow further. Evidently, overseas demand is strong
for Varian's high energy cancer treatment machines.
According to medical experts at Kantonsspital St. Gallen, the
consolidation will serve the hospital's need for brisk volumetric
modulated arc treatments in radiation oncology. This should
improve patient volume and standards of care over time. As per
management, the integration of Eclipse with Elekta linear
accelerators should support advanced cancer treatment.
We believe that Varian is poised to increase its market share in
radiation oncology. International markets are adjudged to be too
under-equipped to address the growing incidence of cancer. Given
the rising demand for cancer treatment in the overseas market,
stronger overseas presence should increase Varian's ex-U.S.
Moreover, Varian continues to post decent results despite the
contagion of economic problems in Europe and sustained softness
in certain end markets. The company delivered positive earnings
surprises in the last 4 quarters with an average beat of 3.64%.
Varian is slated to release third-quarter fiscal 2013 earnings
results on Jul 24.
On the tepid side, Varian competes with well-funded competitors
for a limited pool of sales volume. Pricing pressure in emerging
markets adversely affects margins. The macro problems in Europe
may also affect its growing international franchise.
The stock carries a Zacks Rank #4 (Sell). Other medical stocks
MAKO Surgical Corp.
Edwards Lifesciences Corp
Natus Medical Inc.
) are worth considering. These stocks carry a Zacks Rank #2