Varian Medical Systems'
) Board of Directors authorized the repurchase of another 8 million
shares during the period from September 29, 2012 to December 31,
2013. The share repurchases may be done in different forms, such as
accelerated share repurchase programs or in the open market.
This fresh authorization comes over and above the 4.4 million or
so shares outstanding under the present 12 million share repurchase
plan. The share repurchase plan comes to an end at the
conclusion of the company's fiscal year on September 28, 2012.
The company will pursue share repurchases in accordance with the
legal framework, including SEC rules on the matter. The number of
shares to be repurchased and its timing will be dependent on the
market situation. Varian will extinguish shares following
repurchase. The program may be altered as per the requirements of
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
Varian 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.
Moreover, Varian enjoys a strong balance sheet marked by low
debt and sizeable cash. The company uses a part of its healthy cash
flows for share repurchases.
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.
We are currently 'Neutral' on Varian. The stock retains a Zacks
#4 Rank, which translates into a short-term Sell rating.
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