Why Most Analysts Recommend a ‘Buy’ for Varian Medical Systems



Analysts’ recommendations

With its recent spin-off of Varex Imaging (VREX), Varian Medical Systems (VAR) has been established as a focused cancer management medical technology company. For more, read The New Varian: A Leaner, Meaner Medical Machine Company. Now, let’s look at the company’s Wall Street recommendations and target prices on the stock for the next 12 months.

In a Reuters survey of eight brokerage companies, around 25% of the firms rated Varian Medical Systems a “buy.” 75% of the analysts recommended a “hold” on the VAR stock.

The chart above shows a recommendation summary on VAR. The consensus 12-month target price for VAR stock is $104.3. The target price represents an approximately -0.33% potential return. The closing price on September 21, 2017, was $104.6.

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Target prices

The highest analyst target price for Varian Medical Systems is $115, which represents a maximum return potential of 9.9% for the next 12 months. VAR’s lowest 12-month target price of $75 implies a minimum 12-month return potential of around -28.3%.

On September 7, 2017, BTIG Research lowered its recommendation on VAR from “buy” to “neutral.” Royal Bank of Canada also maintained a “hold” rating on the VAR stock on September 1, 2017. It has a 12-month price target of $100 on the stock. However, Jefferies maintained its “buy” rating on VAR and expects a possible upside to the stock price over the next 12 months.

Peers Boston Scientific (BSX), Accuray (ARAY), and Intuitive Surgical (ISRG) have average broker target prices of ~$30.98, $6.27, and $1,016.2, respectively. These target prices represent returns of 7.7%, 40.9%, and -1.4%, respectively, over the next 12 months.

Investors who want exposure to Varian Medical Systems can consider investing in the Vanguard Mid-Cap ETF (VO). VO has approximately 0.28% of its total holdings in Varian Medical Systems.


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