Varian Medical (VAR) Down to Strong Sell on Dismal Q3

On Nov 14, 2014, Zacks Investment Research downgraded Varian Medical Systems (VAR) to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Varian Medical’s disappointing third-quarter 2014 results were the primary reason inducing the rank downgrade. Adjusted earnings of $1.11 per share missed the Zacks Consensus Estimate by a dime. Revenues of $812.1 million also lagged the Zacks Consensus Estimate of $838 million.

For the first quarter of fiscal 2015, Varian Medical Systems expects combined revenues from Oncology Systems and Imaging Components businesses as well as proton orders currently in backlog to grow by 0% to 2%. Earnings per share (including the expected 9 cents per share of restructuring charge) are expected in the range of 76 to 80 cents.

For fiscal 2015, Varian Medical Systems expects revenues from Oncology Systems and Imaging Components businesses as well as proton orders currently in backlog to rise in the range of 5% to 6%. Including the 9 cents per share of restructuring charge, earnings for the company are expected in the range of $4.16 to $4.26 per share.

Given the present headwinds, analysts remain reasonably apprehensive, as is evident from the downward estimate revisions. Over the last 30 days, the Zacks Consensus Estimate fell 8.2% (39 cents) to $4.39 per share for full year 2014 while the same for 2015 declined 3.1% (16 cents) to $4.96 per share.

Stocks to Consider

While we choose to avoid Varian Medical at present, better-ranked stocks include AngioDynamics (ANGO), ABIOMED, Inc. (ABMD) and Edwards Lifesciences Corp. (EW). While AngioDynamics sports a Zacks Rank #1 (Strong Buy), ABIOMED and Edwards Lifesciences hold a Zacks Rank #2 (Buy).

Read the Full Research Report on VAR
Read the Full Research Report on ANGO
Read the Full Research Report on EW
Read the Full Research Report on ABMD


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