Varex Imaging (VREX) Stock Forecast & Price Target

Varex Imaging Corp has demonstrated a rebound in its business from China, generating approximately $35 million in sales for F1Q25, with expectations for further operating improvements driven by higher-margin tube sales. The company has strategically diversified its material sources and expanded its manufacturing capabilities, adopting a local-for-local strategy, which mitigates risks associated with supply chain disruptions and enhances operational efficiency. Additionally, with a strong cash flow generation of $9.5 million and a robust cash position of $345 million against $566 million of debt, Varex's financial stability supports a positive outlook for future growth amid increasing global demand for cargo inspection systems and X-ray imaging components.

Varex Imaging Corp is experiencing revenue challenges, with a reported $200 million in F1Q25, a 2.9% sequential decline despite a year-over-year increase of 5.2%. The company's dependence on the Chinese market poses significant risks, as ongoing anti-corruption actions and potential tariffs could impact approximately 15% of total revenues, complicating material imports and increasing costs. Additionally, Varex has guided revenues for F2Q25 to be between $200 million and $215 million, indicating a negative growth outlook of up to 3% year-over-year due to underperformance in key segments like radiography, oncology, and dental.