UPDATE: Citigroup Reduces PT to $63 on Varian Medical Systems on Reimbursement Reductions

Citigroup reiterated its Neutral rating on Varian Medical Systems

on Monday but reduced its price target on shares from $67 to $63. Citigroup commented, "On Friday night (7/6), CMS released its proposed C2013 payment rates for physician services (Physician Fee Schedule), Hospital Outpatient (HOPPS), and Ambulatory Surgical Center (ASC) rates. Based on the proposals, radiation oncology cuts at FSCs were significantly greater than expected while hospital outpatient rates increased greater than expected. … We reiterate our Neutral rating on VAR and lower our target to $63 (from $67) on a lower 16x P/E (from 17x) as the sizeable FSC rate cut proposal combined with concerns over OUS business mix/pricing will likely remain overhangs for the stock for the near term." Varian Medical Systems closed at $59.93 on Friday.