Morningstar | Solid Order Growth for Varian in 3Q; Maintaining Valuation
Varian's third-quarter results and full-year forecast on an organic currency-neutral basis remain in line with our expectations, and we maintain our fair value estimate of $112 per share and our wide moat rating.Varian's revised guidance for 2018 of 9%-11% on the revenue line was primarily a result of a strong performance in the year to date. The company continues to see excellent uptake of Halcyon, with 17 new orders placed in the quarter, and strong growth in software (13% year-over-year growth) and services (up 10%). Order growth was very healthy, particularly in North America (up 9%). Weakness in Asia is a factor of tough comparisons, with key markets China and Japan still growing in mid- to high single digits. Halcyon demand has been particularly strong in emerging markets, with nearly half of orders coming from this region.
Varian is taking market share in software. The company continues to expand its RapidPlan installed base, with an 80% increase in the quarter, consistent with the last quarter's performance. There are still significant opportunities remaining, as RapidPlan is currently installed on just 20% of Varian's total platform base. With strong aftermarket revenue growth, the company is becoming less exposed to capital sales fluctuations.
Varian delivered in-line performance on the bottom line, with both gross and operating margin showing improvement. The company is baking in a modest tariff impact on its full-year margin and earnings line.
Varian Medical Systems is a manufacturer of medical devices and software for treating cancer and other medical conditions. The company's segments are: Oncology Systems, which designs, manufactures, sells and services hardware and software products for treating cancer with radiotherapy, and treatments such as fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy and brachytherapy, as well as associated equipment; and Proton Solutions, which develops, designs, manufactures, sells and services products and systems for delivering proton therapy, for the treatment of cancer.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.