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Here's Why You Should Hold onto Varian Medical (VAR) Stock Now

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Varian Medical Systems, Inc.  is likely to gain from solid prospects of its Proton Therapy Solutions segment. However, the company apprehends material impact on revenues due to the coronavirus outbreak.

Shares of the company have gained 22.4% compared with the industry’s 15.9% rally in a year’s time.

This $15.91-billion medical technology company currently has a Zacks Rank #3 (Hold). Varian Medical’s earnings are expected to grow 13.1% in fiscal 2022. Also, the company has a trailing four-quarter earnings surprise of 13.3%, on average.

Lucrative Partnerships and Acquisitions: Varian Medical has been focusing on inorganic growth through its acquisition strategy. On Aug 2, 2020, in the biggest MedTech deal so far this year, management announced that the company will be acquired by Siemens Healthineers in an all-cash deal value of $16.4 billion. The transaction is expected to close in the first half of next year and post completion, Varian Medical will continue to operate as an independent company under Siemens. With this deal, Varian Medical will be able to expand its renowned customer care, thereby offering service to clinicians and patients from the very first stage in the battle against cancer.

In November 2020, the company inked a new $10-million investment and partnership agreement with COTA, Inc., a Boston-based curator of clinical data in oncology.  Both companies will collaborate to equip cancer clinics with data analytics and decision support tools, using real-world evidence to guide clinical and operational decision making as well as drive more cost-efficient patient outcomes.

Notable Developments in Proton Therapy:  In recent times, Varian Medical saw notable breakthroughs in its core Proton therapy unit, which falls under its Particle Therapy business. In October 2020, management announced that the company secured an Investigational Device Exemption (IDE) from the FDA for the first-ever clinical trial of FLASH therapy, an experimental treatment modality delivering radiation therapy at ultra-high dose rates. In September 2020, the company received the FDA 510(k) clearance for its Eclipse v16.1 treatment planning software for proton therapy

These achievements should boost Varian Medical’s Proton Therapy Solutions segment.

Deterrents

The ongoing coronavirus outbreak rattled U.S. medical technology companies with major players apprehending losses due to the shutting down of operations worldwide.

Varian Medical is no exception since the company enjoys a strong international presence, particularly in the Asia Pacific zone. Notably, it is experiencing delays in hardware and software installations and acceptance as well as in the delivery of interventional oncology procedures.

Estimate Picture

For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $3.52 billion, indicating an improvement of 11% from the reported figure in the preceding fiscal year. For adjusted earnings per share, the same stands at $5.20, suggesting growth of 32.9% from the reported figure in the preceding fiscal year.

Key Picks

Some better-ranked stocks from the broader medical space are Align Technology (ALGN - Free Report) , DaVita Inc (DVA - Free Report) and Thermo Fisher Scientific (TMO - Free Report) , each presently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology has a projected long-term earnings growth rate of 18.3%.

DaVita has a projected long-term earnings growth rate of 18.3%.

Thermo Fisher has an estimated long-term earnings growth rate of 18%.

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