Jefferies raises Varex Imaging stock price target to $12 on improving business conditions

Varex Imaging (VREX) recently demonstrated strong Q3 2025 performance, significantly beating EPS forecasts with $0.18 and slightly exceeding revenue expectations at $203 million, despite a 3% year-over-year decline. This robust fiscal showing, driven by strategic initiatives and margin expansion, led Jefferies to raise its price target to $12 (Hold) based on anticipated business improvements, and B.Riley to increase its target to $16 (Buy) reflecting the company's strong execution. These actions signal a potential positive shift in outlook for the medical imaging component manufacturer after previous headwinds.

Analysis

Varex Imaging (VREX) reported a notably strong third quarter for 2025, with earnings per share of $0.18 significantly outperforming the forecast of $0.02. While quarterly revenue of $203 million also surpassed expectations, it represented a 3% decline compared to the previous year, signaling persistent top-line pressure. The company's substantial earnings beat, despite lower revenue, was driven by notable margin expansion attributed to strategic initiatives and technological advancements. This performance prompted divergent analyst actions: B.Riley reiterated a 'Buy' rating and raised its price target to $16, citing strong fiscal performance. In contrast, Jefferies, while increasing its price target to $12.00 from $10.00, maintained a 'Hold' rating. Jefferies' more cautious stance is based on an anticipated, but not yet fully realized, improvement in business conditions following years of headwinds from China, inventory destocking, and tariffs. With the stock trading near Jefferies' target, the market appears to be balancing strong current profitability against the uncertainty of a full revenue recovery.

Key Decisions for Investors

• Investors should weigh the significant EPS beat and margin expansion, which signal strong operational efficiency, against the 3% year-over-year revenue decline, which indicates that top-line growth has not yet recovered.
• Note the split analyst sentiment; while B.Riley's $16 target suggests considerable upside, Jefferies' 'Hold' rating and $12 target imply the stock is fairly valued and the recovery may already be priced in.
• Monitor future financial reports for a return to positive year-over-year revenue growth, as this will be the key catalyst to confirm the turnaround narrative and justify a valuation beyond current levels.