After the company posted mixed fiscal fourth-quarter results, shares of Varian Medical Systems (NYSE:VAR), a provider of radiation therapy products, rose as much as 12% in early-morning trading on Wednesday. Shares were up about 8% as of 12:45 p.m. EDT.
Here's a look at the key numbers from the quarter:
- Revenue grew 11% to $802 million. This was substantially ahead of the $773 million in revenue that analysts were expecting.
- GAAP operating earnings jumped 29% to $1.26.
- On a non-GAAP basis, earnings per share rose 11% to $1.16. For context, Wall Street was expecting $1.20 in non-GAAP EPS.
Zooming out to the full year, here's what happened:
- Revenue jumped 11.4% to $2.92 billion.
- Adjusted earnings rose 36% to $4.42 per share.
Finally, here's a look at the guidance that is being shared with investors for the fiscal year 2019:
- Revenue is expected to grow 5% to 8% to $3.06 billion or $3.15 billion. This range compares favorably to $3 billion in annual revenue that Wall Street was predicting.
- Non-GAAP EPS is projected to land between $4.60 and $4.75. The middle of this range is slightly behind the $4.76 that analysts had modeled.
Wall Street appears to be squarely focused on the top line, which is why shares are rallying today.
It's a bit surprising to see Varian's stock jump so much given the mixed results. After all, shares have enjoyed a great run over the past few years, and they are currently trading for about 24 times the midpoint of forward earnings. That's quite a rich valuation given that market watchers only expect earnings growth of about 8% over the long term.
With a tepid growth forecast and premium valuation, I'm content to root for this company's success from the sidelines and keep my attention focused on more promising healthcare stocks.