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Varian (VAR) Announces Preliminary Fiscal 2015 Results

Varian Medical Systems, Inc. VAR recently announced preliminary results for fiscal 2015. The company expects adjusted EPS for the fiscal to be lower than its previous guidance.

For fiscal 2015, Varian now expects adjusted EPS of $4.29, as compared with the previous guidance of $4.36-$4.41. The slashed figure can be primarily attributed to lower revenue expectation from the company's high margin Oncology Systems business. The company expects revenue increase of approximately 2% (6% at constant currency) from the year-ago quarter.

Gross orders for Oncology Systems in the fourth quarter of 2015 are expected to increase 5% at constant currency. For fiscal 2015, Oncology gross orders are expected to increase 6% on a year-over-year basis. Meanwhile, gross orders for Imaging Components are likely to decline 30% in the fourth quarter and 16% in 2015.

Management believe that sluggishness at the company's Imaging Components business will be somewhat offset by increased orders at the Oncology and Proton businesses.

Varian expects revenue growth for fiscal 2016 in the range of 4%-5%. Adjusted EPS for the year is expected between $4.45 and $4.55 per diluted share.

We believe Varian is well positioned to benefit from higher demand for its products in China and BRICA countries. The growing private markets in China and Brazil are expected to present strong growth opportunity to the company in 2015 and beyond.

However, intensifying competition in the Oncology market is a major concern. The Imaging Component segment is expected to remain soft owing to lower demand for security and inspection products as well as for panel and tube products.

Meanwhile, owing to a strengthening U.S. dollar, the company is facing considerable pricing pressure from Japanese and European manufacturers at the Imaging Component segment, which is a potent headwind over the near term.

Zacks Rank and Key Picks

Currently, Varian carries a Zacks Rank #4 (Sell). Better-ranked stocks in the medical sector are Masimo MASI , Baxter International BAX and NuVasive NUVA . All the stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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