Contrasting Varian Medical Systems (VAR) & Masimo (MASI)

Masimo (NASDAQ: MASI) and Varian Medical Systems (NYSE:VAR) are both medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Masimo and Varian Medical Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Masimo 0 1 5 0 2.83
Varian Medical Systems 2 4 2 0 2.00

Masimo currently has a consensus price target of $102.67, suggesting a potential upside of 5.77%. Varian Medical Systems has a consensus price target of $111.29, suggesting a potential downside of 6.01%. Given Masimo’s stronger consensus rating and higher probable upside, research analysts clearly believe Masimo is more favorable than Varian Medical Systems.

Profitability

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

Net Margins Return on Equity Return on Assets
Masimo 15.99% 23.14% 18.33%
Varian Medical Systems 4.77% 27.99% 12.51%

Institutional & Insider Ownership

82.9% of Masimo shares are held by institutional investors. Comparatively, 94.2% of Varian Medical Systems shares are held by institutional investors. 12.6% of Masimo shares are held by company insiders. Comparatively, 0.8% of Varian Medical Systems shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Masimo has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, Varian Medical Systems has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Masimo $798.11 million 6.30 $131.61 million $2.45 39.62
Varian Medical Systems $2.67 billion 4.06 $249.60 million $3.60 32.89

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

Summary

Masimo beats Varian Medical Systems on 9 of the 14 factors compared between the two stocks.

Masimo Company Profile

Masimo Corporation, a medical technology company, develops, manufactures, and markets noninvasive monitoring technologies worldwide. The company offers Masimo Signal Extraction Technology (SET) pulse oximetry with measure-through-motion and low-perfusion pulse oximetry monitoring to address the primary limitations of conventional pulse oximetry. It also provides Masimo rainbow SET platform that includes rainbow SET Pulse CO-Oximetry products that noninvasively monitor hemoglobin species, including oxygen saturation, pulse rate, perfusion index, pleth variability index, and respiration rate from the pleth; noninvasively monitor hemoglobin concentration, and carboxyhemoglobin and methemoglobin saturation; monitor arterial oxygen saturation and acoustic respiration rate; and calculates oxygen content and oxygen reserve index. In addition, the company offers SedLine brain function monitoring technology to measure the brain's electrical activity by detecting EEG signals; capnography and gas monitoring products comprising external plug-in-and-measure capnography and gas analyzers, integrated modules, and handheld capnograph and capnometer devices; and O3 regional oximetry for tissue oxygen saturation measurement. Further, it provides Patient SafetyNet, a surveillance, remote monitoring, and clinician notification solution; MyView, a wireless presence-detection system; and connectivity devices. The company provides its products directly, as well as through distributors and original equipment manufacturers partners to hospitals, emergency medical service providers, physician offices, veterinarians, long term care facilities, and consumers. Masimo Corporation has a strategic partnership with NU Hospitals. The company was founded in 1989 and is headquartered in Irvine, California.

Varian Medical Systems Company Profile

Varian Medical Systems, Inc. designs, manufactures, sells, and services medical devices and software products for treating cancer and other medical conditions worldwide. It operates through two segments, Oncology Systems and Varian Particle Therapy. The Oncology Systems segment provides hardware and software products for treating cancer with radiotherapy, fixed field intensity-modulated radiation therapy, image-guided radiation therapy, volumetric modulated arc therapy, stereotactic radiosurgery, stereotactic body radiotherapy, and brachytherapy. Its products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, and accessories; and information management, treatment planning, image processing, clinical knowledge exchange, patient care management, decision-making support, and practice management software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, physicians' offices, oncology practices, radiotherapy centers, and cancer care clinics. The Varian Particle Therapy segment develops, designs, manufactures, sells, and services products and systems for delivering proton therapy for the treatment of cancer. Varian Medical Systems, Inc. has a strategic partnership with Siemens AG to co-develop new imaging and treatment solutions. The company was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. Varian Medical Systems, Inc. was founded in 1948 and is headquartered in Palo Alto, California.

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