On Apr 29, we retained Varian Medical Systems, Inc. (VAR) at Neutral after the company reported results for the second quarter fiscal 2013.
Why the Reiteration?
On April 24, Varian reported net earnings of $1.04 per share which beat the Zacks Consensus Estimate of $1.01 per share.
Revenues in the fiscal second quarter increased 7% year over year to $768.4 million, beating the Zacks Consensus Estimate of $765 million. Order backlog rose 4% year over year to $2,752.6 million at the end of the reported quarter. Net orders dropped 14.7% year over year to $735.8 million.
Revenues from Oncology Systems increased 3% year over year to $581.8 million in the fiscal second quarter. Net orders for the segment dropped 2% (9% drop in North America partly offset by a 4% rise ex-North America) to $555 million.
Revenues for X-Ray Products segment in the fiscal second quarter came in at $140.4 million, up 14% year over year. Revenues from the Other category rose about 43.9% from the year-ago quarter to $46.2 million in the reported quarter.
Following the release of the fiscal second quarter results, the Zacks Consensus Estimate for fiscal 2013 has remained stagnant at $4.11 over the last 7 days. The Zacks Consensus Estimate for fiscal 2014 has declined 1.3% to $4.59 during the same timeframe.
Moving ahead, Varian continues to expect revenues to grow by about 8% for fiscal 2013. Net earnings for fiscal 2013 remain unchanged in the band of $4.09 to $4.14 per share. For third-quarter fiscal 2013, the company envisions sales to grow roughly 7% year over year. Varian expects net earnings in the range of 98 cents to $1.02 per share for the fiscal third quarter.
Med-Tech Stocks that Warrant a Look
Varian carries a Zacks Rank #3 (Buy). NuVasive, Inc. (NUVA) carries a Zacks Rank #1 (Strong Buy). Abiomed, Inc. (ABMD) and The Cooper Companies Inc. (COO) each carry a Zacks Rank #2 (Buy) and are expected to do well.
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