J.P. Morgan Cuts Varian Medical Systems Inc. On FX Headwinds

Varian Medical Systems Inc.'s VAR recently lowered revenue outlook from pressure exerted by a strong dollar will weigh on the company's shares over the near-to-intermediate term, an analyst said Thursday. J.P. Morgan's Tycho W. Peterson downgraded the Palo Alto-based medical device company to Neutral, from Overweight, maintaining a $90 target. Revenue from outside North America amounted to 57 percent of Varian's $3.05 billion total last year. Varian said Wednesday that currency headwinds, "will more than offset the earnings momentum of the first half." Varian forecast 2015 earnings of $4.02 to $4.14 a share, versus Wall Street's expectation of $4.25 a share. Varian changed hands recently down more than 6 percent at $88.61. Peterson said Varian has a strong competitive position in its markets and is benefitting from long-term "tail winds" in the market for medical devices and software for treating cancer. But Varian's advantages are now "fairly reflected" in its stock price, Peterson said. The company on Wednesday posted earnings of $1.05 a share, 5 percent higher than the average Wall Street estimate, while revenue fell 2 percent to $759 million.