Shares of Intutive Surgical (ISRG) and Varian Medical Systems (VAR) are rising after the Chinese government announced its medical equipment plans through 2020, including a new 154-system quota for Intuitive Surgical. PIPER RAISES PRICE TARGET ON INTUITIVE SURGICAL: On Wednesday, Piper Jaffray analyst JP McKim noted that the National Health and Family Planning Commission in China announced an “unexpected” new 154-system quota for Intuitive Surgical Wednesday, calling this a “clear accelerant” for its international procedure volume. The company has between 70 and 80 systems in China which are amongst the highest utilized systems in the world, so this should accelerate procedure growth as well, McKim added. He also said the system upgrade cycle remains underway as trade-in activity remain elevated despite being down from the second quarter. Given the new China quota, he raised his 2019 and 2020 sales and earnings estimates and increased his price target on Intuitive Surgical shares to $625 from $613. McKim kept an Overweight rating on the stock. CITI UPS VARIAN MEDICAL TARGET: Also on Wednesday, Citi analyst Amit Hazan raised his price target for Varian Medical Systems to $145 and kept a Buy rating on the shares. China posted medical equipment plans through 2020 which include new linear accelerators of nearly 1,400 total units, Hazan said, adding he views this as a “major positive” for radiation oncology players that “far exceeds expectations.” Inclusive in the quota are 188 Class A and 1,208 Class B systems, and Varian “is better positioned than ever before to capture both ends of the quality spectrum,” Hazan writes. PRICE ACTION: Intuitive Surgical was up 6.6% to $523.26 in afternoon trading, while Varian rose 6.7% to $119.67.
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