Analyzing Varian Medical Systems (VAR) and Hologic (HOLX)

Hologic (NASDAQ: HOLX) and Varian Medical Systems (NYSE:VAR) are both mid-cap medical companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Risk and Volatility

Hologic has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Varian Medical Systems has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500.

Institutional and Insider Ownership

96.4% of Hologic shares are held by institutional investors. Comparatively, 99.6% of Varian Medical Systems shares are held by institutional investors. 0.8% of Hologic shares are held by company insiders. Comparatively, 0.9% of Varian Medical Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Hologic and Varian Medical Systems’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hologic $2.98 billion 3.55 $1.01 billion $2.68 14.07
Varian Medical Systems $3.27 billion 2.99 $643.00 million $3.04 34.98

Hologic has higher revenue, but lower earnings than Varian Medical Systems. Hologic is trading at a lower price-to-earnings ratio than Varian Medical Systems, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Hologic and Varian Medical Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hologic 25.65% 23.18% 7.39%
Varian Medical Systems 9.50% 24.70% 11.12%

Analyst Ratings

This is a summary of recent recommendations and price targets for Hologic and Varian Medical Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hologic 0 4 9 0 2.69
Varian Medical Systems 2 6 2 0 2.00

Hologic presently has a consensus target price of $48.62, suggesting a potential upside of 28.88%. Varian Medical Systems has a consensus target price of $94.94, suggesting a potential downside of 10.71%. Given Hologic’s stronger consensus rating and higher probable upside, research analysts plainly believe Hologic is more favorable than Varian Medical Systems.

Hologic Company Profile

Hologic, Inc. is a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products with an emphasis on women’s health. The Company operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health. The diagnostics products include Aptima family of assays, ThinPrep system, the Rapid Fetal Fibronectin Test and Procleix blood screening assays. It offers viral load assays for the quantitation of Hepatitis B Virus (HBV), Hepatitis C Virus (HCV) and Human Immunodeficiency Virus-1 (HIV-1). The Breast Health products include breast imaging and related products and accessories, including digital mammography systems, computer-aided detection (CAD) and breast biopsy guidance systems. The GYN Surgical products include NovaSure Endometrial Ablation System and MyoSure Hysteroscopic Tissue Removal System. The Skeletal Health segment offers Discovery and Horizon X-ray bone densitometers and mini C-arm imaging systems.

Varian Medical Systems Company Profile

Varian Medical Systems, Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

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