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Varian (VAR) to Report Q4 Earnings: What's in the Offing?

Zacks Equity Research
·5 min read

Varian Medical Systems Inc.’s VAR fourth-quarter fiscal 2020 results are scheduled to release on Oct 27, after market close.

In the last-reported quarter, the company delivered an earnings surprise of 41.8%. Let’s take a look at how things are shaping up prior to this announcement.

Q4 Estimates Picture

Currently, the Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $ 831.6 million, suggesting a fall of 5.4% from the year-ago number. The same for adjusted earnings per share (EPS) stands at 98 cents, indicating a year-over-year fall of 19%.

Key Catalysts

Varian’s solid Oncology platform is expected to have driven fiscal fourth-quarter performance, with the Protons Solutions business likely to have contributed to growth.

In May 2020, the company partnered with National University Cancer Institute, Singapore (NCIS), to expand access to cancer solutions in Singapore. Two Varian VitalBeam medical linear accelerators along with an Edge radiosurgery system with HyperArc technology will be installed at NCIS, widening the scope of radiation therapy treatment options.

Also, in May, the company announced that it is installing a Varian ProBeam Compact system equipped with a 360-degree gantry and integrated cone beam CT at Proton Therapy Pte., Ltd.'s site in Singapore.

These developments are expected to get reflected on fiscal fourth-quarter results.

In May 2020, the company launched new features for its Noona software application, a powerful tool developed to engage cancer patients in their continuous reporting and symptom monitoring processes. Noona offers cancer care teams in-app features such as patient screening, real-time symptom reporting, secure care team messaging, telephone triage workflow automation, and patient access to medical records, thereby helping them with the new short and long-term healthcare changes resulting from the coronavirus pandemic. This development, which is in response to the challenges brought on by the pandemic, is expected to have boosted Varian’s Oncology segment during the fiscal fourth quarter.

However, it is important to mention here that the continued impact of COVID-19 might have weighed on overall revenues at the Oncology segment in the fiscal fourth quarter.

Varian Medical Systems, Inc. Price and EPS Surprise

 

Varian Medical Systems, Inc. Price and EPS Surprise
Varian Medical Systems, Inc. Price and EPS Surprise

Varian Medical Systems, Inc. price-eps-surprise | Varian Medical Systems, Inc. Quote

Nonetheless, Varian’s key radiotherapy solutions — Eclipse and TrueBeam — are currently seeing robust demand from healthcare vendors.

In March 2020, Varian announced the newest release of its treatment planning system, Eclipse v16. This release comprises intelligent features such as RapidPlan PT, the first clinical application of machine learning in proton treatment planning. In the same month, the company announced that the Proton International at the University of Alabama at Birmingham (UAB) has successfully treated its first cancer patient with the Varian ProBeam Compact proton therapy system.

Strong customer reception for Ethos therapy solution is also expected to have driven the fiscal fourth-quarter performance. In September, the company announced that it has received Germany’s first order of Ethos therapy from the German Cancer Research Center (DKFZ) in Heidelberg. In the same month it announced that Goshen Center for Cancer Care in Goshen treated its first patient with Ethos Therapy.

These developments are also expected to have driven fiscal fourth-quarter performance.

The Halcyon Platform is also likely to have contributed to sales in the to-be-reported quarter. In September, the company announced that Proton Therapy Pte. Ltd. has become the first to bring Halcyon system into Singapore with its order for the same.     

What Our Quantitative Model Suggests

Per our proven model, thecombination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see.

Earnings ESP: Varian has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as these too have the right combination of elements to post an earnings beat in the to-be-reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo Corporation MASI has an Earnings ESP of +10.71% and a Zacks Rank of 3.

Cardinal Health, Inc. CAH has an Earnings ESP of +1.70% and a Zacks Rank of 2 at present.

IDEXX Laboratories, Inc. IDXX has an Earnings ESP of +1.42% and is a Zacks #2 Ranked stock.

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