Share price of Varian Medical Systems Inc. rallied to a new 52-week high of $96.31 on Aug 29. This represents an impressive year-to-date return of approximately 19.2%, better than the S&P 500’s 6.7% over the same period.
Currently, Varian Medical has a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $3.15 billion.
Key Factors
Varian’s oncology business growth prospects remain impressive. The company is addressing both the tier 1 and mid-tier markets through its Edge, Truebeam and VitalBeam products. The company is also winning contracts, not only in the Americas but also in the international markets, which is a huge positive.
The strong third quarter of 2016 results validates this growth scenario. Adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate by a nickel and increased 6.1% on a year-over-year basis. The figure comfortably surpassed management’s guided range of $1.16–$1.20 per share.
Oncology System sales increased 8.3% from the year-ago quarter to $605.2 million, while gross orders increased 6.4% to $675.9 million in the quarter. Moreover, Oncology gross margin improved more than 400 basis points to 46% driven by favorable product mix (higher mix of TrueBeams and software) as well as productivity gains.
Following the strong results, Varian raised its fiscal year 2016 guidance. The company now expects adjusted earnings in the range of $4.62–$4.66 per share, up from the previously given guided range of $4.55–$4.65 per share. Revenues are still expected to increase by 3% in fiscal year 2016.
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2016 increased by a penny to $4.65 over the last 7 days. For fiscal 2017, estimates have remained steady at $4.94 over the same time frame.
Key Sector Picks
Better-ranked stocks in the broader medical sector include Masimo Corporation (MASI - Free Report) , Natus Medical and IDEXX Laboratories (IDXX - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy).
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
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Share price of Varian Medical Systems Inc. rallied to a new 52-week high of $96.31 on Aug 29. This represents an impressive year-to-date return of approximately 19.2%, better than the S&P 500’s 6.7% over the same period.
Currently, Varian Medical has a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $3.15 billion.
Key Factors
Varian’s oncology business growth prospects remain impressive. The company is addressing both the tier 1 and mid-tier markets through its Edge, Truebeam and VitalBeam products. The company is also winning contracts, not only in the Americas but also in the international markets, which is a huge positive.
The strong third quarter of 2016 results validates this growth scenario. Adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate by a nickel and increased 6.1% on a year-over-year basis. The figure comfortably surpassed management’s guided range of $1.16–$1.20 per share.
Oncology System sales increased 8.3% from the year-ago quarter to $605.2 million, while gross orders increased 6.4% to $675.9 million in the quarter. Moreover, Oncology gross margin improved more than 400 basis points to 46% driven by favorable product mix (higher mix of TrueBeams and software) as well as productivity gains.
Following the strong results, Varian raised its fiscal year 2016 guidance. The company now expects adjusted earnings in the range of $4.62–$4.66 per share, up from the previously given guided range of $4.55–$4.65 per share. Revenues are still expected to increase by 3% in fiscal year 2016.
Estimate Revisions
The Zacks Consensus Estimate for fiscal 2016 increased by a penny to $4.65 over the last 7 days. For fiscal 2017, estimates have remained steady at $4.94 over the same time frame.
Key Sector Picks
Better-ranked stocks in the broader medical sector include Masimo Corporation (MASI - Free Report) , Natus Medical and IDEXX Laboratories (IDXX - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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