Varian Medical Systems
) recently revealed that it was setting up a subsidiary company in
South Korea, Varian Medical Systems, Korea. The new entity will
gradually don the role of a domestic base for Varian's strategic
The Korean subsidiary will provide localized assistance for HDX
Corporation, which has sold Varian products in that country for
over two decades. Varian believes that the subsidiary will further
cement its ties with HDX.
Varian installed its first TrueBeam system in Korea last February.
It forecasts a few more TrueBeam setups in the near future. The
country is host to over 100 linear accelerators provided by
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 flow
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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