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Here's Why You Should Hold Varian Medical (VAR) Stock Now
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Varian Medical Systems, Inc. is currently gaining from a slew of collaborations and buyouts, and a raised guidance. However, tariff woes from the U.S.-China trade dispute plague the company.
Shares Up
Over the past year, shares of this Zacks Rank #3 (Hold) company have increased 19.4% compared with the industry’s 6.2% rally. Shares have also outperformed the S&P 500 index’s 6.7% rally.
What’s Favoring the Stock?
Strong View
In recent times, Varian Medical raised its guidance for 2019 revenues to $3.09-$3.18 billion from the previously guided $3.06-$3.15 billion.
Moreover, the company continues to expect adjusted earnings per share of $4.60-$4.75, compared with the previously stated band of $4.55-$4.70.
Collaborations & Buyouts
Varian Medical has been making noteworthy progress through collaborations in recent times.
For instance, the company recently announced a tie-up with Tennessee Oncology for the implementation of Noona. Notably, Noona is a software application for managing patient symptoms and capturing patient reported outcomes. This is expected to drive Varian’s core Oncology business, which is a significant contributor to the company’s top line.
Moreover, in a bid to boost cancer care, Varian announced the acquisition of Texas-based Endocare and Hangzhou, and China-based Alicon, last month. Thus, the company is focusing on inorganic expansion through buyouts. (Read More: Varian Medical Buys Endocare & Alicon to Boost Cancer Care)
Also, in recent times, Varian acquired Cancer Treatment Services International for $283 million. Notably, the company expects the buyout to prove accretive to earnings per share during fiscal 2021 on an adjusted basis and fiscal 2022 on a reported basis.
Deterrents
The U.S.-China trade dispute has impacted overseas sales of several MedTech manufacturers. This affected Varian Medical’s last-quarter revenues by $9 million. In fact, the core Proton business was impacted by $7 million in recent times.
Additionally, management at Varian expects cash flow from operations to fall to $460-$510 million as against the earlier stated range of $440-$490 million, owing to the slew of acquisitions by the company.
For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.14, indicating an increase of 9.6% from the year-ago quarter’s reported figure. The same for revenues is pinned at $760.2 million, suggesting an increase of 7.2% from the figure reported in the year-ago quarter.
For fiscal 2019, the Zacks Consensus Estimate for revenues is $3.14 billion, calling for a rise of 7.6% from the year ago. The same for earnings stands at $4.64, implying growth of 5% from the figure reported in the previous year.
DENTSPLY’s long-term earnings growth rate is expected to be 11.5%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
CONMED’s long-term earnings growth rate is estimated at 13.3%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Here's Why You Should Hold Varian Medical (VAR) Stock Now
Varian Medical Systems, Inc. is currently gaining from a slew of collaborations and buyouts, and a raised guidance. However, tariff woes from the U.S.-China trade dispute plague the company.
Shares Up
Over the past year, shares of this Zacks Rank #3 (Hold) company have increased 19.4% compared with the industry’s 6.2% rally. Shares have also outperformed the S&P 500 index’s 6.7% rally.
What’s Favoring the Stock?
Strong View
In recent times, Varian Medical raised its guidance for 2019 revenues to $3.09-$3.18 billion from the previously guided $3.06-$3.15 billion.
Moreover, the company continues to expect adjusted earnings per share of $4.60-$4.75, compared with the previously stated band of $4.55-$4.70.
Collaborations & Buyouts
Varian Medical has been making noteworthy progress through collaborations in recent times.
For instance, the company recently announced a tie-up with Tennessee Oncology for the implementation of Noona. Notably, Noona is a software application for managing patient symptoms and capturing patient reported outcomes. This is expected to drive Varian’s core Oncology business, which is a significant contributor to the company’s top line.
Moreover, in a bid to boost cancer care, Varian announced the acquisition of Texas-based Endocare and Hangzhou, and China-based Alicon, last month. Thus, the company is focusing on inorganic expansion through buyouts. (Read More: Varian Medical Buys Endocare & Alicon to Boost Cancer Care)
Also, in recent times, Varian acquired Cancer Treatment Services International for $283 million. Notably, the company expects the buyout to prove accretive to earnings per share during fiscal 2021 on an adjusted basis and fiscal 2022 on a reported basis.
Deterrents
The U.S.-China trade dispute has impacted overseas sales of several MedTech manufacturers. This affected Varian Medical’s last-quarter revenues by $9 million. In fact, the core Proton business was impacted by $7 million in recent times.
Additionally, management at Varian expects cash flow from operations to fall to $460-$510 million as against the earlier stated range of $440-$490 million, owing to the slew of acquisitions by the company.
Varian Medical Systems, Inc. Price and Consensus
Varian Medical Systems, Inc. price-consensus-chart | Varian Medical Systems, Inc. Quote
Which Way Are Estimates Headed?
For the fiscal third quarter, the Zacks Consensus Estimate for earnings is pegged at $1.14, indicating an increase of 9.6% from the year-ago quarter’s reported figure. The same for revenues is pinned at $760.2 million, suggesting an increase of 7.2% from the figure reported in the year-ago quarter.
For fiscal 2019, the Zacks Consensus Estimate for revenues is $3.14 billion, calling for a rise of 7.6% from the year ago. The same for earnings stands at $4.64, implying growth of 5% from the figure reported in the previous year.
Key Picks
A few better-ranked stocks in the broader medical space are DENTSPLY SIRONA (XRAY - Free Report) , Penumbra (PEN - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DENTSPLY’s long-term earnings growth rate is expected to be 11.5%.
Penumbra’s long-term earnings growth rate is projected at 21.5%.
CONMED’s long-term earnings growth rate is estimated at 13.3%.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>