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What's in Store for Varian Medical Systems for the Rest of 2016?

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Part 2
What's in Store for Varian Medical Systems for the Rest of 2016? PART 2 OF 5

Varian Medical Systems Attempts to Improve Its Performance Growth

Fiscal 2016 performance expectations

Varian Medical Systems (VAR) raised its guidance for fiscal 2016 given higher-than-expected 3Q16 results reported on July 27, 2016. The company expects its 2016 revenues to grow approximately 3% from 2015. This growth is expected to be driven by the company’s leading position in the oncology device market and the rebound in the company’s imaging components business.

Varian Medical Systems Attempts to Improve Its Performance Growth

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Varian Medica Systems expects to register 2016 net diluted EPS (earnings per share) in the range of $4.62–$4.66. This outlook compares to the company’s 2015 EPS of $4.21.

According to analysts’ estimates, Varian Medical Systems will register revenues of around $3.2 billion in 2016, representing growth of around 2.8%. The adjusted EPS should come in at around $4.65, which would represent YoY growth of around 10.2% versus around 4.2% in 2015.

Quarterly guidance

Varian Medical Systems’ 4Q16 revenue growth is expected to be around 7%. This outlook compares to the 0.7% YoY revenue growth reported in 3Q16. The growth in 4Q16 should be driven by mid-single-digit growth in the company’s oncology business, low-single-digit growth in the imaging business, and an additional $20 million to $25 million in proton therapy revenues.

According to analysts’ projections for 2016, Varian Medical Systems’ competitors Boston Scientific (BSX), C.R. Bard (BCR), and Accuray (ARAY) can expect to earn revenue of $2.1 billion, $7.5 billion, and $5.3 billion, respectively, in their next quarters.

Investors seeking exposure to Varian Medical Systems can invest in the iShares Russell Mid-Cap ETF (IWR). IWR has around 0.15% exposure to Varian Medical Systems.

In the next part of this series, let’s look at the company’s oncology segment growth and how it’s driving performance.

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