Varex Imaging (VREX) Stock Forecast & Price Target

Varex Imaging Corp has demonstrated a positive financial outlook as evidenced by its strong sales performance in the first quarter of fiscal 2025, particularly in China, which generated approximately $35 million in sales, primarily from higher-margin products. The company's strategic diversification of material sources and expansion of manufacturing capabilities have strengthened its operating resilience and reduced reliance on cross-border trade, positioning it favorably amidst supply chain disruptions. Furthermore, Varex's significant cash flow generation of $9.5 million coupled with a substantial cash position of $345 million illustrates its financial stability and ability to capitalize on growth opportunities in border security and cargo inspection systems.

Varex Imaging Corp is experiencing headwinds as its first-quarter revenues of $200 million declined by 2.9% sequentially, indicating potential weakness in sales performance despite a year-over-year growth of 5.2%. Uncertainty regarding tariffs, particularly those affecting its 15% revenue share from China, poses a significant risk to the company’s profitability, compounded by the Chinese government's anti-corruption measures that have created challenges in sales within that market. Furthermore, the company's guidance for the second quarter suggests a subdued outlook, with anticipated revenues between $200 million and $215 million, reflecting a potential year-over-year decline in certain segments, such as radiography and oncology.