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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 a slew of overseas developments and a strong view for fiscal 2019.

Shares Up

Over the past year, shares of the Zacks Rank #2 (Buy) company have rallied 18.4% compared with the industry’s 10.5% rise. The current level is also higher than the S&P 500 index’s 8.7% rally.

What’s Favoring the Stock?

View Intact

Varian Medical has kept its guidance for fiscal 2019 intact.

Year-over-year revenue growth is expected in the range of $3.06-$3.15 billion, up 5-8%.

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

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

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

Overseas Developments

The company recently announced the installation of cyclotron for the Varian ProBeam proton therapy system at Hefei Ion Medical Center in China. (Read More: Varian Medical's ProBeam Installed in China's HIMC)

Varian Medical has also opened a permanent office in Hertford Office Park, Midrand, Johannesburg, South Africa, to improve cancer care in the EMEA region. (Read More: Varian Medical Opens Office in South Africa, Expands in EMEA)

Moreover, the company’s much coveted Halcyon system completed its first successful patient demonstration at the Beacon hospital in Selangor, Malaysia. (Read More: Varian Announces Halcyon's First Successful Case in Malaysia)

Last month, Varian Medical tied up with Korea University Medical Center Anam Hospital which led to the first treatment by the company’s flagship Halcyon system in the country. (Read More: Varian Medical Collaborates With Korea-Based Hospital)

Varian Medical Systems, Inc. Price and Consensus

 

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

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 $3.13 billion, reflecting a rise of 7.2% year over year. The same for earnings stands at $4.73, showing growth of 7% year over year.

Other Key Picks

Other top-ranked stocks in the broader medical space are Stryker Corporation SYK, Penumbra PEN and Masimo Corporation MASI, each carrying a Zacks Rank of 2.

Stryker’s long-term earnings are expected to grow 10%.

Penumbra has a long-term earnings growth rate of 20.9%.

Masimo’s long-term earnings are estimated to grow 15.60%.

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