Varian Medical Systems, Inc. (NYSE:VAR)

CAPS Rating: 5 out of 5

The Company designs, manufactures, sells and services advanced equipment and software products for treating cancer with radiation.


Player Avatar Cmoor (98.39) Submitted: 1/27/2009 11:56:52 AM : Outperform Start Price: $34.46 VAR Score: +2.90

Varian is in the enviable position of having the technologically superior equipment in a business largely immune to recession. People continue to get cancer, and most receive treatment paid by third party payers. Therefore, they choose their hospital based on its reputation as being "the best". Hospital's treatment equipment is largely dictated by doctor's practicing there, and they invariably want the newest and best. Varian's sales and profit show that they continue to increase market share in the radiation treatment equipment and imaging space and that, unlike fears, purchasing of the newest and best equipment by hospitals has not slowed even during the '08 downturn. Order backlog remains high. The company has nearly $400 million in cash, little long term debt, and a history of repurchasing stock to leverage earnings per share growth. Analysts project earnings growth of 10-11% the next 4-5 years. Another quarter or two of continued earnings growth will convince the doubters this one has been oversold.

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