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How Is Varian Positioned for 2018 after 2017 Transformation?

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Part 8
How Is Varian Positioned for 2018 after 2017 Transformation? PART 8 OF 8

Varian’s Latest Wall Street Recommendations: Mostly ‘Hold’

Analyst recommendations

Varian Medical Systems underwent a transformation after the spin-off of its Imaging Components business in January 2017, which was named Varex Imaging (VREX). Since the spin-off, the company has undertaken a number of strategic initiatives to strengthen its position as a leading cancer management company around the world. For details, read The New Varian: A Leaner, Meaner Medical Machine Company. Varian Medical Systems registered strong results for fiscal 4Q17 and fiscal 2017 during its quarterly earnings release on October 25, 2017. Now, let’s look at the company’s recommendations and target prices by Wall Street analysts for the next 12 months.

Varian&#8217;s Latest Wall Street Recommendations: Mostly &#8216;Hold&#8217;

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According to a recent Reuters survey, which included eight investment brokerage firms, two (or 25%) of the firms provided “buy” ratings for Varian Medical Systems. The remaining six (or 75%) recommended a “hold” for VAR stock. Although none of the analysts gave it a “sell” rating, mostly “hold” ratings suggest a moderate outlook for the stock. A summary of VAR’s ratings is in the above chart.

Target prices

As of November 30, 2017. Wall Street analysts’ consensus target price for VAR stock for the next 12 months was $104.90, representing a 12-month return potential of -5.7%. The return is based on the closing price of $111.20 on November 29, 2017.

On October 29, 2017, BTIG reaffirmed its “hold” rating on VAR stock. The firm had lowered its rating from “buy” to “hold” in September 2017. The Royal Bank of Canada also has a “hold” rating on VAR stock.

As of November 20, 2017, VAR’s peers Accuray (ARAY), Intuitive Surgical (ISRG), and Boston Scientific (BSX) had average analyst target prices of $6, $373.90, and $31.30, respectively. These target prices represent returns of 15.4%, -5.2%, and 20.7%, respectively, over the next 12 months.

Varian Medical Systems makes up 0.58% of the total portfolio of the Vanguard Mid-Cap Growth ETF (VOT). Investors can take a lower-risk exposure to VAR by investing in VOT.

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