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Here's Why You Should Buy Varian Medical (VAR) Stock Now

Zacks Equity Research

Varian Medical Systems, Inc. VAR is expected to benefit from solid fiscal first-quarter results and a slew of positive developments.

The stock currently has a Zacks Rank #2 (Buy).

Shares Up

Over the past year, shares of Varian Medical have rallied 11.5% compared with the S&P 500 index’s 3.5% gain.

What’s Favoring the Stock?

Fiscal Q1 Results

Varian Medical’s first-quarter fiscal 2019 adjusted earnings of $1.06 per share were on par with the Zacks Consensus Estimate. Adjusted earnings were flat with the year-ago quarter.

Revenues totaled $741 million, which outpaced the consensus mark of $717.9 million. On a year-over-year basis, revenues rose 9.2% and 10% at constant currency.

The company has kept the guidance intact.

Notably, for fiscal 2019, year-over-year revenue growth is expected in the range of $3.06-$3.15 billion, up 5-8%. The Zacks Consensus Estimate is pegged at $4.70, much above the expected range.

Adjusted operating earnings, as a percentage of revenues, is projected in the band of 17-18%.

Adjusted net earnings per share are expected in the range of $4.60 to $4.75.

Cash flow from operations is expected in the band of $460-$510 million.


The California-based MedTech giant has seen a series of developments in recent times.

Last month, Varian Medical-equipped Danish Center for Particle Therapy officially opened at the Aarhus University Hospital in Aarhus, Denmark.

Moreover, Varian is equipping Nigeria’s NSIA-LUTH Cancer Treatment Centre with one Halcyon treatment system and two VitalBeam radiotherapy systems. This fortifies the company’s foothold in emerging economies.

In January, the company announced the installation of the gantry for the Varian ProBeam Compact single-room proton therapy system at the new oncology center at Biopolis, an international biomedical research hub in Singapore. (Read More: Varian Medical's ProBeam Compact Picked by Biopolis)

Which Way Are Estimates Headed?

For the fiscal second quarter, the Zacks Consensus Estimate for earnings is pegged at $1.16, reflecting a year-over-year increase of 0.9%. The same for revenues is pinned at $779.1 million, showing an increase of 6.7% year over year.

For fiscal 2019, the Zacks Consensus Estimate for revenues is at $3.12 billion, reflecting a rise of 7% year over year. The same for earnings shows growth of 6.3% year over year.

Varian Medical Systems, Inc. Price and Consensus


Varian Medical Systems, Inc. Price and Consensus | Varian Medical Systems, Inc. Quote

Other Key Picks

Other top-ranked stocks in the broader medical space are Abbott Laboratories ABT, Merit Medical Systems, Inc. MMSI and Surmodics, Inc. SRDX.

Abbott’s long-term earnings growth rate is projected at 11.7%. The stock has a Zacks Rank #2.

Merit Medical’s long-term earnings growth rate is projected at 13%. The stock has a Zacks Rank #2.

Surmodics’ long-term earnings growth rate is expected to be 10%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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