Varian's TrueBeam in South America - Analyst Blog

By Zacks | December 19, 2012 AAA

Oncology and X-Ray products company Varian Medical Systems (VAR) recently revealed that the Clínicas Oncológicas Integradas (GRUPO COI) is the first cancer treatment facility in South America to order a TrueBeam system for treating tumors. The equipment to be placed by December 31, 2012 will be housed at a Rio de Janeiro site of the group. GRUPO COI provides outpatient and clinical facilities from two sites in Rio de Janeiro.

Varian is a leading manufacturer of integrated radiotherapy systems for cancer treatment and a premier supplier of X-ray tubes for diagnostic imaging applications. The company operates in a technology-driven environment where success depends on the use of new technology, product development and upgrades. In the radiation oncology market, Varian competes with Accuray (ARAY).

The company is poised to increase its market share in radiation oncology. It currently enjoys a healthy demand for its coveted TrueBeam technology, which has meaningfully contributed to its net order oncology growth. Varian's TrueBeam was designed to treat tumors with beams of high speed and precision. It incorporates several technological innovations such as patient positioning and managing his/her motion. Given its high intensity nature, TrueBeam can dispense strong dosage over twice as fast as that possible with earlier equipment.

Moreover, Varian enjoys a strong balance sheet marked by low debt and moderate cash. The company from time to time uses a part of its healthy cash flow for share repurchases.

Varian competes with larger players in a technology-intensive industry. Further, uncertainties stemming from health care reform and a still weak hospital capital spending environment across many developed countries, especially in Europe, are significant challenges.

We are currently Neutral on Varian. The stock retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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