Varian Medical Systems Inc. (NYSE:VAR) is set to report second-quarter fiscal 2016 earnings results on Apr 27. Last quarter, Varian reported earnings of 99 cents per share, which beat the Zacks Consensus Estimate by 6.5% (6 cents). Notably, the company’s earnings have topped the Zacks Consensus Estimate in the last four quarters, by an average of 4.5%.
Let’s see how things are shaping up for this quarter.
Factors at Play
For the second quarter of fiscal 2016, Varian expects revenues to increase 1%–2% from the year-ago quarter. Adjusted earnings are projected in the band of $1.06–$1.10 per share.
We believe Varian is well positioned to benefit from higher demand for its products outside the U.S., particularly in China and BRICA countries. Meanwhile, aggressive investment in the software business is a key growth catalyst.
We believe that the newly approved VitalBeam product presents significant growth opportunity for Varian. Moreover, the company’s focus on improving cost structure by reducing headcount and streamlining operations will boost profits despite the significant impact from foreign exchange headwinds.
Earnings Whispers
Our proven model does not conclusively show that Varian Medical is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Varian has a 0.00% ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.08.
Zacks Rank: Varian carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.
Stocks to Consider
Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:
PAREXEL International Corporation (NASDAQ:PRXL) with earnings ESP of +2.25% and a Zacks Rank #1.
Align Technology Inc. (NASDAQ:ALGN) with earnings ESP of +12.82% and a Zacks Rank #2.
Becton, Dickinson and Company (NYSE:BDX) with earnings ESP of +2.49% and a Zacks Rank #2.
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VARIAN MEDICAL (VAR): Free Stock Analysis Report
ALIGN TECH INC (ALGN): Free Stock Analysis Report
BECTON DICKINSO (BDX): Free Stock Analysis Report
PAREXEL INTL CP (PRXL): Free Stock Analysis Report
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