According to analysts’ consensus estimate, Varian Medical Systems (VAR) has the potential to return ~5% over the next 12 months. Of the recommendations received from 12 brokerage companies in a Bloomberg survey, 33.3% of analysts gave Varian Medical Systems a “buy” recommendation, and ~50% gave it a “hold” rating. ~16.7% of the analysts gave the company a “sell” rating.
The table above lists the nine brokerage firms that provided target prices for Varian Medical Systems for the next one year. The consensus 12-month target price for the company is $84.7, amounting to a 5% return potential. Varian Medical Systems’ price was $80.6 on June 29, 2016.
Analysts’ 12-month target prices
On June 28, 2016, Goldman Sachs gave Varian Medical Systems a one-year target price of $73, the lowest of all the target prices provided. This target implies a -9.4% return over the next 12 months. Among the other large investment banks, Morgan Stanley gave Varian Medical Systems the one-year target price of $80, which implies a return potential of -0.7% over the next 12 months. The higher one-year target of $95 was provided by Jefferies, which represents a return potential of ~17.8%.
Peers C R Bard (BCR), Accuray (ARAY), and Boston Scientific (BSX) have average broker target prices of $230.8, $9.1, and $24.5, respectively. These figures imply returns of -0.6%, 76.7%, and 6.6%, respectively, in the next 12 months. Investors may want to consider ETFs such as the Guggenheim S&P 500 Equal Weight ETF (RSP). RSP has ~0.18% exposure to Varian Medical Systems.
Let’s discuss Varian Medical Systems’ valuation as compared to its peers in the next part of the series.