Varex Imaging Corporation (NASDAQ:VREX) Just Reported Earnings, And Analysts Cut Their Target Price

The investors in Varex Imaging Corporation's (NASDAQ:VREX) will be rubbing their hands together with glee today, after the share price leapt 32% to US$9.48 in the week following its third-quarter results. Revenues of US$203m beat expectations by a respectable 6.7%, although statutory losses per share increased. Varex Imaging lost US$2.15, which was 1,730% more than what the analysts had included in their models. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Taking into account the latest results, the most recent consensus for Varex Imaging from five analysts is for revenues of US$852.6m in 2026. If met, it would imply a modest 3.8% increase on its revenue over the past 12 months. Varex Imaging is also expected to turn profitable, with statutory earnings of US$0.49 per share. In the lead-up to this report, the analysts had been modelling revenues of US$836.2m and earnings per share (EPS) of US$0.63 in 2026. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

Check out our latest analysis for Varex Imaging

The average price target fell 22% to US$16.60, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Varex Imaging at US$23.00 per share, while the most bearish prices it at US$10.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Varex Imaging's past performance and to peers in the same industry. The analysts are definitely expecting Varex Imaging's growth to accelerate, with the forecast 3.0% annualised growth to the end of 2026 ranking favourably alongside historical growth of 2.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 8.2% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Varex Imaging is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Varex Imaging's revenue is expected to perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Varex Imaging's future valuation.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Varex Imaging analysts - going out to 2027, and you can see them free on our platform here.

Even so, be aware that Varex Imaging is showing 1 warning sign in our investment analysis , you should know about...

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.