Jefferies cuts Varex Imaging price target to $15, keeps Hold rating

On Thursday, Varex Imaging (NASDAQ:VREX) shares experienced a notable price movement. Jefferies analyst Matthew Taylor adjusted the company’s price target to $15.00, a decrease from the previous $16.00, while maintaining a Hold rating on the stock. The revision follows a period of volatility where Varex Imaging’s stock dropped approximately 20% after reporting its first-quarter results, despite what was described as a solid performance. According to InvestingPro data, the stock has declined 11.58% in the past week and 20.89% over the last year, with current trading at $13.44.

Taylor remarked on the lack of clear fundamental reasons behind the initial drop in Varex Imaging’s stock value. However, he noted a swift recovery, highlighting that the stock had regained much of its lost value, climbing 14% from its low within two days. This rebound suggests investor confidence in the stock’s resilience. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 4.36, and its overall financial health score is rated as GOOD, suggesting fundamental stability despite market volatility.

Varex Imaging’s financial results showed a particularly strong performance in the Chinese market. According to Taylor’s analysis, China recorded its best quarter in a year and a half, since the implementation of an anti-corruption campaign in the summer of 2023. The company’s year-over-year growth in China was 7%, with a quarter-over-quarter increase of 12%, contributing to approximately 18% of total revenue or around $35 million. This surge was attributed to an improvement in orders from the region.

The change in price target reflects the current market dynamics and the analyst’s assessment of Varex Imaging’s financial health and market position. While the Hold rating suggests a neutral stance, the positive indicators from the Chinese market provide a constructive view of the company’s potential for growth.

In other recent news, Varex Imaging Corporation experienced a notable decrease in stock value following first-quarter revenue results that fell short of Wall Street’s expectations. Despite the company’s revenue reaching $200 million and non-GAAP net earnings of $0.07 per diluted share, which slightly surpassed analysts’ estimates, the revenue figure only represented a 5% year-over-year increase. Varex also announced receiving orders valued at approximately $14 million for its new high-energy cargo inspection systems, indicating a growing need for advanced security solutions globally.

In financial developments, Varex has launched a private offering of $125 million in senior secured notes due October 15, 2027, and priced a similar offering at 101.5% of their principal value. These actions are part of a strategy to repay, in part, its outstanding Convertible Notes due in June 2025. The company’s balance sheet showed a healthy cash flow from operations at $10 million for the quarter, with cash, cash equivalents, and marketable securities totaling $219 million at the end of the first quarter.

According to Oppenheimer analyst Suraj Kalia, Varex remains a deep-value name with best-in-class X-ray core competency, despite near-term pressures. These are recent developments in the company’s operations and financial status.

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