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Varian Medical Systems, Inc. (VAR - Analyst Report) showcased its latest PaxScan 2530HE flat-panel X-ray image detector at the 2013 Transport Security Expo recently held in London. The device finds application in high-energy industrial and security imaging systems. Varian’s aim was to sell its offerings to professionals from the aviation, maritime, public transport and supply chain security sectors attending the Expo.

VAR’s share price had dropped sharply after reporting a disappointing fourth-quarter fiscal 2013 results on Oct 23. Both revenues and earnings missed the Zacks Consensus Estimate for the quarter. However, after dropping to a low of $72.50 on Nov 1, the company’s shares have slowly started recovering. As of Nov 14, Varian’s share price stood at $74.59.

About PaxScan 2530HE

The new PaxScan 2530HE is a part of Varian’s PaxScan amorphous silicon flat-panel image detectors product line. The detectors are capable of acquiring, storing and transmitting high-resolution X-ray images at a low cost and with great efficiency. The special feature of the PaxScan 2530HE is that it can facilitate imaging across a wide range of energy levels – from low-energy wheel hub inspection to high-energy cargo screening.

Other Products Displayed

Along with the PaxScan 2530HE, other offerings such as Varian’s X-ray tubes and high-energy Linatron linear accelerators for industrial inspection and nondestructive testing were also on display at the Transport Security Expo. The X-Ray tubes are used in non-destructive testing, X-Ray inspection, baggage screening, and thickness gauging. VAR’s Linatron accelerators are incorporated into imaging systems for inspecting cargo, artillery, munitions, rocket motors, nuclear submarines, aircraft carriers and tanks.

Our Take

Currently, Varian has a Zacks Rank #3 (Hold). Its net earnings of $1.08 per share for the fourth quarter of fiscal 2013 were flat compared with the prior-year quarter figure and missed the Zacks Consensus Estimate by 4 cents. Revenues edged up 1.8% year over year to $769.9 million, falling short of the Zacks Consensus Estimate of $780 million and missing the company’s growth projection of 5% for the quarter.

Varian’s Oncology Systems franchise continued to struggle in the North American market on account of uncertainty emanating from healthcare reform and anticipated changes in reimbursement.

While VAR stays neutral, stocks that are performing relatively better in the medical instruments industry include CryoLife Inc. (CRY - Snapshot Report), Natus Medical Inc. (BABY - Snapshot Report) and Cynosure, Inc. (CYNO - Snapshot Report). All of them carry a Zacks Rank #1 (Strong Buy).

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