BUY, SELL, HOLD (2)

2 Healthcare Stocks Making Big Earnings Moves

Analysts are still very bearish on Varian Medical Systems stock

Jan 25, 2018 at 10:21 AM
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Corporate earnings have been a big reason the U.S. stock market has been able to notch one record high after another in 2018, and the impressive quarterly updates show no sign of slowing down. Two of the most recent winners are healthcare stocks Varian Medical Systems, Inc. (NYSE:VAR) and Abbott Laboratories (NYSE:ABT). Shares of VAR are trading at record levels following the company's well-received earnings report last evening, while ABT is extending yesterday's post-earnings upside thanks to even more bullish analyst attention.

Varian Medical Stock Surges On Fourth-Quarter Beat-and-Raise

Shares of Varian Medical Systems -- a company that makes devices and software for radiation oncology treatments -- have spiked 10.5% out of the gate to trade at $124.93, tapping a record high of $125.42 in the process. The company said fiscal first-quarter profit more than doubled, helping it top earnings forecasts, while it also boosted its full-year outlook. In response, brokerage firm Barrington upgraded VAR to "outperform," and Citigroup and RBC raised their respective price targets to $132 and $115 -- though Goldman Sachs cut its rating to "sell."

While the shares are pacing for their third best single-day performance over the past 10 years, Varian is no stranger to technical strength; the equity has jumped 52% over the past year alone. Considering this, the negativity seen from analysts is shocking. Specifically, just one of the eight brokerage firms in coverage say to buy the stock, and the average 12-month price target of $112.78 is now below current trading levels.

Abbott Laboratories Stock Hits Another Record High

Abbott actually reported earnings before the open on Wednesday, with the shares surging 4.2% in yesterday's session, as investors cheered robust top- and bottom-line numbers for the company's fourth quarter. ABT shares are up another 1.3% today at $62.51, and just hit another record high of $64.60.

A prolonged round of upbeat analyst notes is helping fuel the upside. William Blair this morning upgraded the stock to "outperform," and at least nine other brokerage firms have raised their price targets since the close yesterday. The healthcare concern is now up 54% in the past 12 months.

Sentiment has been much more bullish on ABT than for VAR. Seventeen of the 22 analysts in coverage recommend buying the shares, and call buying has almost quadrupled put buying over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

 

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