Will Varian Medical Systems’ Sales Decline Again in 1Q18?

VAR’s revenue estimates

Varian Medical Systems (VAR) is set to announce its 1Q18 earnings results on January 24, 2018. According to Wall Street analysts’ estimates, the company will report total revenues of $636.8 million in 1Q18, representing a YoY (year-over-year) decline of 16.6%. It has been almost a year since the company spun off its imaging components business into Varex Imaging. It expects to register growth in sales beginning in fiscal 2Q18.

In 4Q17, Varian Medical Systems registered $739 million in sales, which represents a YoY sales decline of 17.1%. On an operational basis, 4Q17 sales fell 1%. The company failed to meet its Wall Street sales estimate for fiscal 4Q17. VAR stock rose 0.5% on the day of the company’s earnings announcement.

Will Varian Medical Systems’ Sales Decline Again in 1Q18?

New accounting standards impact fiscal 2018 sales guidance

On January 11, 2018, Varian Medical Systems announced the implementation of the new Accounting Standards Codification 606. As a result, the company expects updated guidance ranges. For fiscal 2018, Varian expects to register sales growth of 3%–5% compared to 2%–4% specified by the company according to prior standards.

Varian Medical Systems’ peers in the US medical device industry are Abbott Laboratories (ABT), Intuitive Surgical (ISRG), and Boston Scientific (BSX). They’re expected to have sales growth of 38.5%, 13.6%, and 8.2%, respectively, on a YoY basis for their most recent quarters.

Varian Medical Systems makes up 0.45% of the iShares Edge MSCI Minimum Volatility USA ETF (USMV). Investors looking for diversified exposure to VAR stock can invest in USMV.

In the next part, we’ll look at the earnings estimates for Varian Medical Systems in 1Q18 and fiscal 2017.