Varex Imaging (VREX) AI Stock Analysis

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Varex Imaging

(NASDAQ:VREX)

56Neutral

Varex Imaging's overall stock score reflects a moderate financial performance with strengths in cash flow and revenue growth, but ongoing profitability challenges and risks from high leverage. Technical analysis indicates bearish trends, and valuation metrics are weak due to negative earnings. The earnings call highlighted strong segment growth but also significant risks from tariffs affecting sales in China.

Varex Imaging (VREX) vs. S&P 500 (SPY)

Market Cap

$327.02M

Dividend YieldN/A

Average Volume (3M)633.93K

Price to Earnings (P/E)―

Beta (1Y)1.72

Revenue Growth-3.31%

EPS Growth-199.23%

CountryUS

Employees2,300

SectorHealthcare

Sector Strength41

IndustryMedical - Devices

Share Statistics

EPS (TTM)0.26

Shares Outstanding41,500,000

10 Day Avg. Volume541,077

30 Day Avg. Volume633,926

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.52

Price to Sales (P/S)0.00

P/FCF Ratio12.01

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$12.00

Price Target Upside52.28% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Varex Imaging Business Overview & Revenue Model

Company DescriptionVarex Imaging Corporation designs and manufactures X-ray imaging components. The company operates in two segments, Medical and Industrial. The Medical segment designs, manufactures, sells, and services X-ray imaging components comprising X-ray tubes, digital detectors, high voltage connectors, image-processing software and workstations, 3D reconstruction and computer-aided diagnostic software, collimators, automatic exposure control devices, generators, heat exchangers, ionization chambers, and buckys. This segment's products are used in a range of applications, including radiographic and fluoroscopic imaging, mammography, computed tomography, radiation therapy, oncology, CT, cardiac, surgery, dental, computer-aided detection, and other diagnostic radiography uses. The Industrial segment designs, manufactures, sells, and services Linatron X-ray accelerators, X-ray tubes, digital detectors, and high voltage connectors for use in security and industrial inspection applications, such as airport security, cargo screening at ports and borders, and nondestructive testing and examination in various applications. Varex Imaging Corporation sells its products through imaging system original equipment manufacturers, independent service companies, and distributors, as well as directly to end-users. The company has operations in North America, South America, Europe, Russia, the Middle East, India, Africa, Asia, and Australia. Varex Imaging Corporation was founded in 2016 and is based in Salt Lake City, Utah.

How the Company Makes MoneyVarex Imaging generates revenue primarily through the sale of its imaging components to OEMs and direct customers in various industries. Its key revenue streams include the sale of digital detectors and X-ray tubes, which are integral to medical imaging systems such as CT scanners, mammography units, and fluoroscopy systems. Additionally, the company serves the industrial sector by providing components for non-destructive testing and inspection applications. Varex Imaging's earnings are further bolstered by service contracts, repair and maintenance services, and strategic partnerships with leading OEMs and technology providers, which enhance its market reach and product offerings.

Varex Imaging Financial Statement Overview

Summary

Varex Imaging faces challenges with declining revenues and persistent net losses, impacting its income statement negatively. The balance sheet shows some improvements in leverage and liquidity, while cash flow trends are mixed, highlighting both potential and risks. Strategic focus on improving profitability and managing cash flows effectively is essential for future stability.

Income Statement

Neutral

The income statement shows a declining revenue trend from 2023 to TTM (Trailing-Twelve-Months), coupled with consistent negative net income, indicating profitability challenges. The gross profit margin remains moderate, but the net profit margin is negative due to recurring losses. EBIT and EBITDA margins are also low, reflecting operational inefficiencies.

Balance Sheet

Neutral

The balance sheet reveals a relatively stable equity base and a decreasing debt-to-equity ratio over time, indicating improved leverage management. However, the equity ratio is moderate, suggesting a balanced but not overly strong financial position. Improving cash reserves and reduced net debt are positive signs.

Cash Flow

Neutral

Cash flow analysis shows a fluctuating free cash flow, with recent growth in free cash flow being a positive indicator. The operating cash flow to net income ratio is favorable, reflecting effective cash generation relative to income. However, cash flow volatility poses a risk to sustained financial health.

TTM	Sep 2024	Sep 2023	Sep 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
820.80M	811.00M	893.40M	859.40M	818.10M	738.30M
	Gross Profit
268.30M	256.90M	290.30M	283.50M	271.50M	190.20M
	EBIT
39.10M	32.10M	77.10M	50.70M	33.40M	-30.90M
	EBITDA
67.50M	67.20M	110.30M	123.60M	112.40M	-1.70M
	Net Income Common Stockholders
-47.50M	-47.70M	48.20M	30.30M	17.40M	-56.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
212.60M	200.50M	152.60M	89.40M	144.60M	100.60M
	Total Assets
1.33B	1.22B	1.25B	1.18B	1.15B	1.14B
	Total Debt
592.10M	470.40M	469.50M	436.40M	459.40M	484.50M
	Net Debt
416.10M	301.70M	316.90M	347.00M	314.80M	383.90M
	Total Liabilities
778.00M	667.80M	668.60M	637.70M	651.00M	673.70M
	Stockholders Equity
540.20M	535.10M	567.70M	533.40M	483.30M	451.70M
Cash Flow		Free Cash Flow
23.60M	20.40M	87.70M	-4.40M	77.50M	-10.30M
	Operating Cash Flow
44.20M	47.30M	108.40M	16.90M	92.60M	13.20M
	Investing Cash Flow
-10.60M	-27.50M	-44.90M	-48.40M	-16.20M	-26.90M
	Financing Cash Flow
125.00M	-3.30M	-200.00K	-23.80M	-32.30M	83.60M

Varex Imaging Technical Analysis

Technical Analysis Sentiment

Negative

Last Price7.88

Price Trends

50DMA

9.65

Negative

100DMA

11.66

Negative

200DMA

12.35

Negative

Market Momentum

MACD

-0.47

Negative

RSI

44.29

Neutral

STOCH

48.08

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VREX, the sentiment is Negative. The current price of 7.88 is below the 20-day moving average (MA) of 8.00, below the 50-day MA of 9.65, and below the 200-day MA of 12.35, indicating a bearish trend. The MACD of -0.47 indicates Negative momentum. The RSI at 44.29 is Neutral, neither overbought nor oversold. The STOCH value of 48.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VREX.

Varex Imaging Risk Analysis

Varex Imaging disclosed 31 risk factors in its most recent earnings report. Varex Imaging reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Varex Imaging Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VMD	69 Neutral	$267.18M	22.66	9.79%	―	19.97%	17.21%
VREX	56 Neutral	$327.02M	―	-7.46%	―	-3.31%	-199.23%
Sector *	52 Neutral	$5.15B	3.02	-44.64%	2.83%	16.44%	-0.47%
SENS	50 Neutral	$346.77M	―	-161.19%	―	1.64%	16.02%
SRDX	46 Neutral	$408.67M	―	-16.96%	―	-14.96%	-245.49%
NNOX	45 Neutral	$357.07M	―	-27.83%	―	13.91%	15.46%
TLSI	42 Neutral	$194.49M	―	271.41%	―	85.03%	53.73%

* Healthcare Sector Average

Performance Comparison

VREX

Varex Imaging

7.88

-7.13

-47.50%

SRDX

SurModics

28.58

-6.48

-18.48%

SENS

Senseonics Holdings

0.53

0.06

12.77%

VMD

Viemed Healthcare

6.76

-0.34

-4.79%

NNOX

Nano-X Imaging

5.60

-4.15

-42.56%

TLSI

TriSalus Life Sciences

5.14

-5.01

-49.36%

Varex Imaging Earnings Call Summary

Earnings Call Date:May 08, 2025

(Q2-2025)

% Change Since: -8.90%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook with strong performance in revenue growth, margin improvement, and cash position, countered by significant challenges from tariffs affecting sales in China and potential margin pressures. The company is actively working on mitigation strategies, but the geopolitical situation remains dynamic.

Q2-2025 Updates

Positive Updates

Revenue Growth in Medical and Industrial Segments

Both the Medical and Industrial segments delivered revenue growth of 3% year-over-year. The Medical segment showed strong demand, particularly in CT tubes, while the Industrial segment benefited from global security screening demand.

Improved Gross Margin

Gross margin increased to 36% from 33% in the same quarter last year, driven by improved volume, favorable product sales mix, and productivity gains.

Strong Cash Position

Cash from operations was $17 million, with cash, cash equivalents, and marketable securities totaling $226 million, up $36 million year-over-year.

Significant Cargo Inspection Order

A $25 million order was announced for cargo inspection systems, adding to the previous quarter's $14 million order, with expected installations over the next 12 to 18 months.

Photon Counting Technology Advancements

Continued progress in photon counting technology with active engagement from large imaging OEMs for next-generation CT systems.

Negative Updates

China Tariff Impact

The 125% tariff imposed by China on US products is expected to negatively impact sales by about $20 million in the third quarter, with customers pausing purchases.

Potential Margin Pressure from Tariffs

The tariffs are expected to impact gross margins by 150 to 200 basis points, with mitigation efforts ongoing.

Impact of MOFCOM Investigation

The China Ministry of Commerce initiated investigations on medical products imported into China, which could affect the competitiveness of X-ray tubes.

Reduced Revenue Guidance Due to Tariffs

Revenue guidance for the third quarter is between $180 million and $200 million, with a significant impact anticipated from tariffs, particularly in China.

Company Guidance

During the Varex Q2 Fiscal Year 2025 earnings call, the company reported strong demand. Revenue was near the high end of expectations, with both Medical and Industrial segments experiencing a 3% year-over-year increase. Gross margin reached 36%, up from 33% in the previous year, due to improved volume, a favorable product sales mix, and productivity gains. Cash from operations was $17 million, contributing to $226 million in cash, cash equivalents, and marketable securities, up $36 million year-over-year. Adjusted EBITDA was $34 million, and non-GAAP EPS was $0.26, compared to $25 million and $0.16 in the prior year. Varex highlighted a $25 million order for cargo inspection systems, reflecting ongoing strength in the Industrial segment. However, the company expressed concern over the impact of the 125% tariff imposed by China, potentially reducing sales by $20 million in Q3. Despite these challenges, Varex is actively pursuing strategies to mitigate tariff impacts and expects continued growth driven by innovation and cost leadership.

Varex Imaging Corporate Events

Legal ProceedingsBusiness Operations and StrategyRegulatory Filings and Compliance

Varex Imaging Faces Anti-Dumping Investigation in China

Negative

Apr 4, 2025

Varex Imaging Corporation is aware of an anti-dumping investigation initiated by China’s Ministry of Commerce concerning imports of certain medical CT X-ray tubes from the United States and India. Although the company has not received formal notice, it plans to cooperate if notified and believes it complies with competition laws, highlighting potential impacts on its operations and market positioning.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.