Varian Medical Systems' (VAR - Analyst Report) Board of Directors authorized the repurchase of another 8 million shares during the period from September 29, 2012 to December 31, 2013. The share repurchases may be done in different forms, such as accelerated share repurchase programs or in the open market.
This fresh authorization comes over and above the 4.4 million or so shares outstanding under the present 12 million share repurchase plan. The share repurchase plan comes to an end at the conclusion of the company’s fiscal year on September 28, 2012.
The company will pursue share repurchases in accordance with the legal framework, including SEC rules on the matter. The number of shares to be repurchased and its timing will be dependent on the market situation. Varian will extinguish shares following repurchase. The program may be altered as per the requirements of the company.
Varian is a leading manufacturer of integrated radiotherapy systems for cancer treatment, and a premier supplier of X-ray tubes for diagnostic imaging applications. The company operates in a technology-driven environment where success depends on the use of new technology, product development and upgrades. In the radiation oncology market, Varian competes with Accuray (ARAY - Analyst Report) .
Varian is poised to increase its market share in radiation oncology. It currently enjoys a healthy demand for its coveted TrueBeam technology, which has meaningfully contributed to its net order oncology growth.
Moreover, Varian enjoys a strong balance sheet marked by low debt and sizeable cash. The company uses a part of its healthy cash flows for share repurchases.
However, Varian competes with larger players in a technology-intensive industry. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, are significant challenges.
We are currently ‘Neutral’ on Varian. The stock retains a Zacks #4 Rank, which translates into a short-term Sell rating.