Varian Medical Systems (VAR) is a better-aligned, leaner business with a strong market position after the spin-off of Varex Imaging (VREX) in January 2017. The company is now focused on its core capability: accelerating its position in the cancer-management market. For a discussion on the company’s future potential, read How Is Varian Positioned for 2018 after 2017 Transformation?
On October 25, 2017, Varian Medical Systems released its 4Q17 and 2017 results. The company failed to meet analysts’ earnings estimates, but its revenue came in ahead of estimates. The stock witnessed slight weakness following the earnings announcement due to weak investor sentiments. However, the majority of analysts have “hold” ratings on the stock.
In a Reuters survey made up of eight brokerage companies, ~25% (or two) of companies had “buy” ratings on VAR stock. The remaining 75% (or six) of analysts rated Varian Medical Systems as a “hold.”
Take a look at the chart above for a recommendation summary on Varian stock. As of December 25, 2017, analysts’ consensus 12-month target price for the Varian Medical Systems stock was $105.71, representing an investment return potential of ~-4.7% for the next 12 months.
Rating recommendation revisions and updates
On October 30, 2017, Citigroup raised its target price on VAR stock from $119.00 to $121.00 with a neutral rating on the stock. Currently, BTIG Research and Royal Bank of Canada have “hold” ratings on VAR stock. However, Jefferies has a “buy” rating on the stock with a target price of $110 per share.
As of December 25, 2017, Peers Accuray (ARAY), Intuitive Surgical (ISRG), and Boston Scientific (BSX) have average broker target prices of ~$6.8, $376.5, and $31.2, respectively. These target prices represent returns of 60%, 3.7%, and 24.2%, respectively, over the next 12 months.
To gain exposure to Varian Medical Systems and avoid company-specific risk, investors can consider investing in the Vanguard Mid-Cap Growth ETF (VOT). VOT holds ~0.58% of its total portfolio holdings in VAR stock.