Varex Imaging stock price target raised to $16 from $12 at B.Riley

B.Riley raised its price target on Varex Imaging (VREX) to $16.00 from $12.00, maintaining a Buy rating, following the medical device manufacturer's strong fiscal Q3 2025 performance which significantly exceeded expectations, reporting EPS of $0.18 (an 800% surprise) and revenue of $203 million. The upgrade reflects 'cautious optimism' regarding tariff headwinds, supported by the resumption of orders from China and the company's robust liquidity with a 4.05 current ratio, indicating favorable operational momentum and attractive valuation multiples despite ongoing trade tension concerns.

Analysis

Varex Imaging (VREX) received a significant price target increase to $16.00 from $12.00 by B.Riley, which maintained its Buy rating following a strong fiscal third-quarter 2025 performance. The company demonstrated substantial operational strength by reporting earnings per share of $0.18, an 800% surprise above the $0.02 forecast, and revenue of $203 million, which also surpassed expectations. Despite this quarterly outperformance, revenue was down 3% compared to the prior year, a point of consideration. The positive revision is underpinned by several key factors: the resumption of orders from China after a temporary pause, the suspension of anti-dumping investigations, and notable margin expansion. Furthermore, Varex provided fiscal fourth-quarter guidance that exceeded consensus estimates, suggesting sustained momentum. The company's financial position appears robust, with a strong current ratio of 4.05 and attractive valuation metrics, including a price-to-book ratio of 0.59 and an enterprise value to EBITDA ratio of 6.81x. However, B.Riley's outlook is one of "cautious optimism," explicitly noting that potential rising trade tensions and tariff headwinds remain a key risk to the company's performance.

Key Decisions for Investors

• The significant earnings beat, strong forward guidance, and resumption of key orders from China present a clear positive catalyst, supporting the bullish thesis for a re-rating towards B.Riley's $16 price target.
• Investors should closely monitor US-China trade relations, as the potential for new tariffs is the primary risk factor cited that could derail the company's positive momentum and outlook.
• The combination of a low price-to-book ratio of 0.59 and a strong liquidity position may appeal to value-oriented investors, though the 3% year-over-year revenue decline warrants further due diligence on the company's long-term growth trajectory.