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Varian Medical Systems: Modest Revenue Growth Expected in 2018

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Apr. 3 2018, Published 1:21 p.m. ET

Modest revenue growth

Varian Medical Systems (VAR) is a global leader in the radiotherapy segment. It has a strong presence in all areas of radiation oncology, including radiosurgery systems, radiotherapy, brachytherapy, radiation oncology tracking software, radiation oncology information systems, and proton therapy. The company has estimated that the global radiation market will grow at a compound annual growth rate of 4% from approximately $5.3 billion in 2017 and reach a total value of $6 billion by 2022.

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Varian Medical Systems’ long-term target is to become an integrated, human-centered cancer treatment provider. That involves expanding its footprint in the oncology care coordination segment, which is estimated to grow from $2 billion in 2017 to $6 billion by 2022. The company aims to expand its addressable market size by integrating inputs from areas such as interventional oncology, surgical oncology, medical oncology, precision medicine, diagnostic imaging, and radiation oncology to provide patient-centered care coordination services.

Wall Street analysts have projected Varian Medical Systems’ fiscal 2018 revenues at $2.8 billion, which is a YoY (year-over-year) growth of 4.7%.

Its peers Baxter International (BAX), Abbott Laboratories (ABT), and Boston Scientific (BSX) are expected to report revenues of $11.2 billion, $30.8 billion, and $9.7 billion, respectively, for fiscal 2018.

Guidance for fiscal 2018

Varian Medical Systems has projected its YoY revenue growth at 4%–7% for fiscal 2018. This updated estimate is partly based on the increased growth rate of 4.5% reported by the global radiation therapy market from October 2016 to September 2017, which is significantly higher than the 2% growth reported from July 2016 to June 2017. The company also adjusted its guidance to reflect its rapid share gain in the faster-growing radiation therapy market in 1Q18 as well as the impact of the Tax Cuts and Jobs Act signed by President Trump on December 22, 2017.

In the next part of this series, we’ll look at Varian Medical Systems’ margin growth prospects.

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