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Varian (VAR) to Report Q1 Earnings: What's in the Offing?

Zacks Equity Research
·4-min read

Varian Medical Systems, Inc. VAR is scheduled to release first-quarter fiscal 2021 results on Jan 26, after the closing bell.

In the last reported quarter, the company delivered an earnings surprise of 14.3%. Further, it beat estimates in each of the trailing four quarters, the average surprise being 13.3%.

Q1 Estimates

Currently, the Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $866.3 million, suggesting an improvement of 4.5% from the year-ago reported figure. The consensus mark for earnings stands at $1.16 per share, flat on a year-over-year basis.

Factors to Note

Varian’s Halcyon Platform is likely to have contributed to sales in the fiscal first quarter. In September 2020, the company announced that Proton Therapy Pte. Ltd. has become the first to bring Halcyon system into Singapore with its order for the same.   

In November 2020, the company inked a new $10 million investment and partnership agreement with COTA, Inc., a Boston-based curator of clinical data in oncology. The collaboration will equip cancer clinics with data analytics and decision support tools using real-world evidence to help make clinical and operational decisions, and drive cost-efficient patient outcomes.

Varian Medical Systems, Inc. Price and EPS Surprise

Varian Medical Systems, Inc. Price and EPS Surprise
Varian Medical Systems, Inc. Price and EPS Surprise

Varian Medical Systems, Inc. price-eps-surprise | Varian Medical Systems, Inc. Quote

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Strong customer reception for Ethos therapy solution might have driven the fiscal first-quarter performance.

In September 2020, the company announced that it has received Germany’s first order of Ethos therapy from the German Cancer Research Center (DKFZ) in Heidelberg. Notably, the first Ethos therapy in Germany is set to be installed and will commence treatment of patients by early 2021. This announcement is likely to have strengthened Varian’s Oncology Systems segment and enhanced its exposure to Artificial Intelligence (AI). Further, it might have expanded the company’s geographic footprint, with respect to the adoption of Ethos therapy.

In the same month, the company announced that Goshen Center for Cancer Care in Goshen treated its first patient with Ethos Therapy.

Moreover, Varian’s key radiotherapy solutions — Eclipse and TrueBeam — have been witnessing robust demand from healthcare vendors.

With respect to Proton therapy, Varian has witnessed significant developments in recent times. In September 2020, the company received FDA 510(k) clearance for its Eclipse v16.1 treatment planning software for proton therapy.

In October 2020, the company announced the receipt of an Investigational Device Exemption (IDE) from the FDA for the first-ever clinical trial of FLASH therapy, an experimental treatment modality delivering radiation therapy at ultra-high dose rates. FLASH therapy, involving ultra-high dose rates and delivery in typically less than one second, may be over 100 times swifter compared to conventional radiation therapy.

All the aforementioned developments are expected to get reflected in the company’s fiscal first-quarter results.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here as you will see.

Earnings ESP: Varian has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #5 (Strong Sell).

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

AmerisourceBergen Corporation ABC has an Earnings ESP of +1.93% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics Corporation HAE has an Earnings ESP of +4.80% and a Zacks Rank of 3.

Ecolab Inc. ECL has an Earnings ESP of +0.08% and a Zacks Rank of 3.

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