Is Varian Medical Systems (VAR) Up or Down After Q4 Earnings Report?

Shares of Varian Medical Systems (VAR) plunged last week, after the software and medical device maker reported lackluster fourth quarter earnings. The companyâ s earnings per share were flat from the prior year quarter at $1.08, although profit fell from $120.2 to $117.3 million, due to an increase in outstanding shares. Revenue rose 1.8% to $769.9 million.

Analysts had expected Varian to earn $1.12 per share on revenue of $779 million. Daily Chart
Looking forward, Varian projects earnings of $0.87 to $0.91 per share for the current quarter on revenue growth of 6% to 7%. That comes in lower than the analyst estimate of $0.96 per share on revenue growth of 7% to $726 million. Varianâ s full year earnings per share forecast of $4.22 to $4.34 also came in below the consensus estimate of $4.48. Varianâ s revenue growth forecast of 6% to 8% also barely met the projected 8% growth that Wall Street was expecting. Varian blamed higher costs for its slump in revenue and earnings. During the quarter, research and development costs soared 24% and overhead costs rose 1.1%. The company, which develops medical equipment and software for cancer treatments, stated that slower capital spending in the North American oncology market, along with uncertainty in healthcare reform and potential changes to reimbursement hurt its top and bottom lines. CEO Dow R. Wilson remained upbeat about Varianâ s growth potential. â

Published on Oct 28, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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