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Varian Strong on Global Expansion and Proton Therapy Arm

Zacks Equity Research

On Jan 25, we issued an updated research report on Varian Medical Systems, Inc. VAR. The company’s strong global foothold and a promising Proton Therapy platform are major positives.

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

Price Performance

In the past year, Varian’s shares have rallied 2.5%, outperforming the industry’s rise of 1.4%. The current level also compares favorably with the S&P 500’s decline of 6.3%.

Over the last 30 days, the Zacks Consensus Estimate for the company’s fiscal second-quarter earnings per share moved up by a penny to $1.14.

Varian Medical Systems, Inc. Price and Consensus

 

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

What’s Favoring Varian?

Varian currently enjoys a strong global presence.

In the recently-reported first quarter of fiscal 2019, gross orders under the company’s core Oncology segment rose 15% year over year in EMEA, marking the sixth consecutive quarter of double-digit growth. In APAC, gross orders increased 25% year over year on strength in China.

In Asia, Varian received orders for eight systems from the Philippines Department of Health. The company also opened a manufacturing facility in Jundiai, Brazil and delivered its first locally manufactured TrueBeams to Oncoclinicas in the country.
Last November, Varian was selected by Medical Specialist Holdings to equip seven of its centers in South Africa with Varian Linux and Eclipse treatment planning system.

Moreover, Varian’s flagship Halcyon radiotherapy treatment system recently secured approval from the China National Medical Product Administration, which is likely to expand the global availability of Halcyon. Last December, Halcyon was granted exclusion from the section 301 tariffs by the United States Trade Representative (USTR).

In its Proton Therapy platform, Varian saw some notable developments in recent times.

This month, Varian 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.

Last December, Varian’s Eclipse treatment planning system was selected by Switzerland-based Paul Scherrer Institute Center for Proton Therapy for intensity modulated proton therapy (IMPT) treatments.

In fact, in the fiscal first quarter, revenues at the segment climbed 32% on a year-over-year basis.

Deterrents

Despite the favorable scenario, the U.S.-China tariffs have continued to plague the MedTech giant. Notably, in the recently-reported fiscal first quarter, Varian’s revenues and operating earnings were negatively impacted by tariffs.

Other Key Picks

Other top-ranked stocks in the broader medical space are Becton, Dickinson and Company BDX, Accuray Incorporated ARAY and AngioDynamics ANGO.

Becton, Dickinson’s long-term earnings growth is projected at 11.5%. The stock carries a Zacks Rank #2.

Accuray’s expected earnings growth rate for the current quarter is 60%. The stock carries a Zacks Rank #2.

AngioDynamics’ current-year earnings growth is expected to be 16.2%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks' Top 10 Stocks for 2019

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