Shares of Varian Medical Systems slumped Thursday after the cancer treatment system maker reported disappointing second-quarter results and lowered its expectations for the fiscal year.
Varian makes devices and software used in radiation therapy and surgeries. The company said its overseas business was hurt by the strong U.S. dollar, which makes its products relatively more expensive in other markets. Its X-ray imaging component business was hit particularly hard because some of its customers reduced their inventory, which affected Varian's sales prices. Varian lowered its full-year profit estimate and cited both of those factors.
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The company's shares fell $6.75, or 7.1 percent, to $88.07 in afternoon trading. That made Varian one of the largest losers on the S&P 500 index in the early afternoon.
Varian said its revenue slipped 2 percent to around $759 million. According to Zacks Investment Research, that was about $35 million less than analysts had expected.
Jefferies and Co. analyst Raj Denhoy said Varian's cancer treatment system revenue was weaker than he expected because of foreign currency exchange issues and because the company had a strong second quarter a year ago. However he said Varian's business in North America was a bit better than expected because of renewals with large hospitals, and that pattern could continue.
Denhoy has a "Buy" rating on Varian shares with a price target of $100.
The company is now forecasting a fiscal-year profit of $4.02 to $4.14 per share, down from its previous estimate of $4.16 to $4.26 per share. According to FactSet, analysts expect $4.28 per share on average.
Shares of Varian Medical Systems Inc. are up 20 percent over the last 12 months and reached an all-time high of $96.67 on April 23.