Varex Imaging Corporation (NASDAQ: VREX), a prominent player in the healthcare sector specializing in medical devices, is capturing investor attention with its substantial potential upside of 47.01%. With a market capitalization of $487.77 million, this Salt Lake City-based company is carving out a significant niche in both medical and industrial X-ray imaging components.
Varex Imaging’s current stock price stands at $11.70, with a recent modest increase of 0.18, or 0.02%. Over the past 52 weeks, the stock has fluctuated between $6.88 and $15.52, indicating a robust volatility that could intrigue investors looking for both growth and risk management opportunities. Notably, the stock’s 50-day and 200-day moving averages are $11.64 and $10.12, respectively, signaling a steady upward trend that might appeal to technical analysts.
Despite not having established a trailing P/E ratio due to a current net income deficit, the forward P/E of 12.16 suggests potential earnings growth that could align with investor expectations. The company reported a revenue growth of 11.30%, which highlights its ability to expand even in challenging market conditions. However, the negative EPS of -1.70 and a return on equity of -13.58% might raise concerns about profitability and efficiency, urging investors to weigh these factors carefully.
Varex Imaging’s free cash flow of $39.53 million is a positive indicator of its ability to fund operations and potentially invest in further growth. Although the company does not currently offer dividends, the zero payout ratio means all profits are reinvested into the business, potentially enhancing future earnings.
Analyst sentiment towards Varex Imaging is predominantly positive, with four buy ratings and only one hold, and no sell ratings. The target price range is set between $12.00 and $22.00, with an average target of $17.20, supporting the substantial upside potential. This optimistic outlook from analysts underscores an attractive entry point for those considering long-term investment in the healthcare technology space.
From a technical standpoint, the relative strength index (RSI) of 34.47 suggests that the stock is approaching oversold territory, which could present a buying opportunity for value-seeking investors. The MACD and signal line values at -0.03 and -0.08, respectively, might indicate a potential for upward momentum in the near term.
Varex Imaging operates through two segments: Medical and Industrial. The Medical division focuses on an array of X-ray imaging components used in critical healthcare applications such as CT scans, mammography, and oncology, among others. Concurrently, the Industrial segment delivers solutions for security and inspection applications, such as baggage screening and non-destructive testing. This diversification enables Varex to capitalize on a broad spectrum of market needs across various geographical regions, including North America, Europe, and Asia.
Incorporated in 2016, Varex Imaging continues to make strides in innovation and market expansion, driven by a commitment to enhancing imaging quality and operational efficiency for its customers. While there are challenges to tackle, such as achieving positive net income and improving return on equity, the company’s strategic initiatives and the healthcare sector’s enduring demand provide a solid foundation for future growth.
For investors, Varex Imaging presents a compelling case of high risk and high reward, with significant potential for appreciation. As the healthcare industry evolves, Varex’s technological advancements and market penetration could lead to substantial returns for those willing to invest in its promising trajectory.
