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What's in Store for Varian Medical (VAR) in Q4 Earnings?

Zacks Equity Research

Varian Medical Systems, Inc.’s VAR fourth-quarter fiscal 2019 results are scheduled to release on Oct 23, after market close. In the last reported quarter, the company reported a positive earnings surprise of 15.8%. Further, it has an average positive surprise of 0.9% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

Which Way Are Estimates Treading?

Currently, the Zacks Consensus Estimate for fourth-quarter revenues is pegged at $853.3 million, suggesting growth of 6.4% from the year-ago number. The same for adjusted earnings stands at $1.21, indicating a year-over-year improvement of 4.3%.

Key Catalysts

Varian has witnessed some solid developments in its Proton Therapy platform of late which are likely to reflect on fourth-quarter results.

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

Notably, Varian has been selected by Radiumhospitalet, part of Oslo University Hospital and Haukeland University Hospital Bergen, to equip each center in Norway with a ProBeam multi-room system. Additionally, China’s Shandong Cancer Hospital has equipped its new multi-room proton clinical research center with the ProBeam Proton Therapy system. That’s not all. The pipeline for Varian’s Proton business is healthy. In fact, the company has installed cyclotrons at Biopolis in Singapore and King Chulalongkorn Memorial Hospital in Bangkok, Thailand, recently.

Meanwhile, the recent exclusion of Varian’s radiotherapy products from tariffs in China has in all probability boosted sales in the fourth quarter.

Varian’s series of acquisitions are also expected to aid quarterly results.

For instance, the acquisition of CyberHeart has helped the company foray into the lucrative ventricular tachycardia market. The closing of the CTSI acquisition is also an important step toward innovation of multidisciplinary solutions and provision of services. Also, the buyout of Boston Scientific’s drug loadable microsphere and bland embolic bead product portfolio and Noona are expected to reflect on fourth-quarter results.

Furthermore, it is encouraging to note that Varian has raised its guidance for fiscal 2019 revenues. Notably, the company expects revenues within $3.18-$3.21 billion against the previous $3.09-$3.18 billion. This indicates a year-over-year increase of 9-10% compared with the previously projected band of 6-9%.

However, Varian has narrowed its adjusted earnings per share (EPS) view for fiscal 2019. The company now expects adjusted EPS within $4.58 to $4.63 versus the earlier $4.55 to $4.70.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. This is not the case here as you will see below.

Earnings ESP: Varian Medical has an Earnings ESP of -1.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Varian Medical carries a Zacks Rank #1.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Edward Lifesciences Corporation EW has an Earnings ESP of +0.35% and a Zacks Rank #3.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.55% and a Zacks Rank #3.

Cardinal Health, Inc. CAH has an Earnings ESP of +1.50% and a Zacks Rank #3.

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Varian Medical Systems, Inc. (VAR) : Free Stock Analysis Report
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