Wall Street Analysts Believe VAREX IMAGING (VREX) Could Rally 46.29%: Here's is How to Trade

Varex Imaging (VREX) shares have surged 53.7% over the past four weeks to $11.45, with Wall Street analysts projecting a mean price target of $16.75, indicating a potential 46.3% upside. While the article cautions against the general unreliability and potential bias of analyst price targets, it emphasizes that a more compelling indicator for VREX's potential is the significant 59.5% increase in the Zacks Consensus EPS estimate for the current year over the last 30 days. This strong positive trend in earnings estimate revisions, empirically linked to near-term stock movements and supported by a Zacks Rank #2, suggests a legitimate basis for anticipating further upside.

Analysis

Varex Imaging (VREX) has demonstrated significant near-term momentum, with its stock appreciating 53.7% over the past four weeks to a recent close of $11.45. While Wall Street's mean price target of $16.75 suggests a potential 46.3% upside, this forecast is accompanied by considerable uncertainty, reflected in a wide target range ($10.00 to $23.00) and a high standard deviation of $5.38. The primary bullish driver identified is not the price target itself, but the substantial positive revisions to earnings estimates. Specifically, the Zacks Consensus EPS estimate for the current year has increased by 59.5% over the last 30 days, based on one upward revision and no negative revisions. This strong trend in earnings revisions, coupled with a Zacks Rank #2 (Buy), is presented as a more empirically reliable indicator of potential near-term price appreciation than the analyst price targets, which are often subject to bias and optimism.

Key Decisions for Investors

• Investors should prioritize the 59.5% upward revision in the current year's consensus EPS estimate as the primary bullish signal, as this is presented as a more reliable indicator than the wide-ranging analyst price targets.
• Given the stock's sharp 53.7% run-up in the last month, consider the risk of consolidation or pullback, and be aware of the significant forecast uncertainty highlighted by the high standard deviation in price targets.
• Monitor future earnings estimate revisions closely, as the positive trend in these revisions is the core fundamental argument for further upside in VREX.