Wednesday, February 10, 2016

Seeking Alpha: Varian Medical Needs Room To Grow

While being successful enough to dominate your market is normally a good thing, it does create some valid questions about how Varian (NYSE:VAR) will continue to generate impressive FCF growth when it already has about 60% share of a market that is expected to grow less than 5% a year in the future. Faster-growing emerging markets like China can help, as can the growth of emerging product categories like proton beam therapy, but strong market share, good margins, and reimbursement pressure do create some concerns.

Varian's shares look slightly undervalued to me today and that's not a common experience in the many years I've followed the stock. While I own the much riskier and more undervalued Accuray (NASDAQ:ARAY), I'm not quite as keen on Varian as I don't think the 5% to 10% upside is sufficient reward for the risks of a further slowing of the radiotherapy market and a Wall Street overreaction to that slowdown.

Follow this link to the full article:
Varian Medical Needs Room To Grow

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