Shares of Varex Imaging Corp. advanced about 6.7% in Wednesday’s pre-market session after the X-ray imaging manufacturer’s 4Q revenues of $170 million declined 16% year-over-year, but topped analysts’ estimates of $162.1 million. Varex posted a 4Q loss of $0.04 per share after earnings of $0.47 per share in the year-ago. Analysts had expected a loss of $0.10 per share for the reported quarter.
Varex’s (VREX) CEO Sunny Sanyal stated that “Strong sales of our CT [computed tomography] tubes were partially offset by continued decline in sales for other medical and industrial products.” Sanyal added that 4Q gross margins improved sequentially from 3Q driven by improved product mix and cost reduction measures.
“The impact of COVID on our business has started to stabilize, while the timing and pace of sales recovery continues to remain uncertain,” he said.
As for 1Q, Varex expects earnings in the range of ($0.15)-$0.10 per share, compared with the consensus estimate of $0.02 per share. 1Q revenues are forecasted to generate between $160-180 million, compared with analysts’ expectations of $173.7 million. (See VREX stock analysis on TipRanks).
Following the 4Q results, Oppenheimer analyst Suraj Kalia assigned a Hold rating on the stock, as he believes that “COVID-19 has obscured visibility to a return to growth, while the required operational improvements and debt refinancing look more challenging in the current environment.” However, over the long-term, he is confident “in the core story with high barriers to entry, end-customer stickiness, structurally sound markets, and core competency in imaging and manufacturing.”
Like Kalia, the Street remains sidelined on the stock with a Hold analyst consensus. The average price target stands at $14, implying downside potential of about 3.7% to current levels. Shares have declined by 51.3% year-to-date.
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