Varex Imaging (VREX) AI Stock Analysis

• Market Cap: $508.79M
• Dividend Yield: N/A
• Average Volume (3M): 387.08K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.06
• Revenue Growth: -1.36%
• EPS Growth: -479.49%
• Country: US
• Employees: 2,300
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 0.18
• Shares Outstanding: 41,500,000
• 10 Day Avg. Volume: 350,178
• 30 Day Avg. Volume: 387,084
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 0.76
• Enterprise Value/Gross Profit: 2.23
• Enterprise Value/Ebitda: -34.27
• 1Y Price Target: $19.50
• Price Target Upside: 63.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 57 Neutral
• Price Target: $13.00 ▲(8.70% Upside)

Varex Imaging's overall stock score reflects significant financial challenges, with declining revenues and profitability being the most impactful factors. While technical indicators show bullish momentum, the valuation remains unattractive due to a negative P/E ratio. The earnings call provided mixed signals, with some operational improvements but also highlighted ongoing challenges.

Varex Imaging Business Overview & Revenue Model

Company Description

Varex 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 Money

Varex Imaging generates revenue primarily through the sale of its imaging products and systems. Key revenue streams include the sale of X-ray tubes, flat panel detectors, and related imaging components, which are utilized in medical imaging equipment and industrial applications. Additionally, the company benefits from ongoing service and support contracts, which provide a steady income stream. Varex has established significant partnerships with major medical equipment manufacturers, allowing them to integrate their components into larger systems, which enhances their market reach and contributes to revenue growth. The company also invests in research and development to innovate and expand its product offerings, further driving revenue through new technology introductions.

Varex Imaging Financial Statement Overview

Summary

Varex Imaging is facing significant financial challenges, with declining revenues and profitability impacting its overall financial health. The income statement shows a concerning trend of revenue contraction and operational inefficiencies. The balance sheet reflects a reduction in leverage, but profitability remains a key issue. Cash flow improvements are noted, but free cash flow generation is still weak. The company needs to address these challenges to stabilize and improve its financial performance.

Income Statement

Varex Imaging's income statement reveals significant challenges. The company has experienced a sharp decline in revenue growth, with a TTM revenue growth rate of -73.7%, indicating a substantial contraction in sales. The net profit margin has also deteriorated to -16.13%, reflecting significant losses. While the gross profit margin remains relatively stable at 34.06%, the negative EBIT and EBITDA margins highlight operational inefficiencies and cost management issues. Overall, the income statement suggests a need for strategic improvements to reverse the declining trend.

Balance Sheet

The balance sheet shows a mixed picture. The debt-to-equity ratio has improved to 0.054, indicating a reduction in leverage, which is a positive development. However, the return on equity is negative at -25.48%, reflecting the company's inability to generate profits from its equity base. The equity ratio stands at a healthy level, suggesting a strong capital structure. Despite the improvements in leverage, the negative ROE indicates ongoing profitability challenges.

Cash Flow

The cash flow statement highlights some positive aspects, such as an increase in operating cash flow to $59.6 million, providing a better coverage ratio of 0.34. However, free cash flow growth is negative, and the free cash flow to net income ratio is 0.61, indicating that the company is not effectively converting its earnings into free cash flow. While there are improvements in cash flow from operations, the overall cash flow position remains under pressure due to declining free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	821.40M	811.00M	893.40M	859.40M	818.10M	738.30M
Gross Profit	279.80M	256.90M	290.30M	283.50M	271.50M	190.20M
EBITDA	-18.20M	62.90M	94.70M	119.10M	109.30M	-1.70M
Net Income	-132.50M	-47.70M	48.20M	30.30M	17.40M	-57.90M
Balance Sheet
Total Assets	1.07B	1.22B	1.25B	1.18B	1.15B	1.14B
Cash, Cash Equivalents and Short-Term Investments	152.60M	200.50M	193.90M	89.40M	144.60M	100.60M
Total Debt	24.80M	470.40M	469.50M	436.40M	459.40M	484.50M
Total Liabilities	603.90M	667.80M	668.60M	637.70M	651.00M	673.70M
Stockholders Equity	455.30M	535.10M	567.70M	533.40M	483.30M	451.70M
Cash Flow
Free Cash Flow	36.40M	20.40M	87.70M	-4.40M	77.50M	-10.30M
Operating Cash Flow	59.60M	47.30M	108.40M	16.90M	92.60M	13.20M
Investing Cash Flow	-3.00M	-27.50M	-44.90M	-48.40M	-16.20M	-26.90M
Financing Cash Flow	-76.10M	-3.30M	-200.00K	-23.80M	-32.30M	83.60M

Varex Imaging Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 11.96
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VREX, the sentiment is Positive. The current price of 11.96 is above the 20-day moving average (MA) of 11.67, above the 50-day MA of 10.04, and above the 200-day MA of 10.78, indicating a bullish trend. The MACD of 0.53 indicates Positive momentum. The RSI at 66.50 is Neutral, neither overbought nor oversold. The STOCH value of 79.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VREX.

Varex Imaging Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VMD	74 Outperform	262.97M	19.71	10.00%	―	17.11%	45.34%
VREX	57 Neutral	$508.79M	―	-25.57%	―	-1.36%	-479.49%
TLSI	48 Neutral	241.36M	-4.04	128.34%	―	45.50%	53.07%
SENS	46 Neutral	382.90M	-4.50	-327.88%	―	5.94%	25.16%
SRDX	43 Neutral	435.51M	-24.92	-15.84%	―	-0.02%	-1196.44%
NNOX	40 Underperform	252.50M	-4.17	-28.30%	―	17.36%	9.38%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Varex Imaging Corporate Events

Varex Imaging Faces Anti-Dumping Investigation in China

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.