Varex Imaging Skyrockets 22.8%—What Hidden Catalyst Ignited This Explosive Move?

Summary
• Varex Imaging (VREX) surges 22.79% intraday, trading at $9.59 with a 52-week high of $16.93
• Q3 revenue hits $203M, exceeding guidance, while industrial segment grows 1% YoY
• China sales rebound contributes 15% of total revenue, reversing earlier trade tensions

Varex Imaging’s stock has erupted on August 8, 2025, surging 22.79% to $9.59 amid a Q3 earnings beat and renewed optimism over China demand. The industrial segment’s resilience and non-GAAP margin expansion to 34% have ignited investor enthusiasm. With cash flow from operations at $8M and a $153M cash balance, the company’s strategic debt reduction and bullish guidance for Q4 have positioned it as a focal point in the healthcare equipment sector.

Q3 Earnings Beat and China Demand Recovery Fuel VREX Surge
Varex Imaging’s 22.79% intraday surge was catalyzed by a Q3 revenue beat of $203M, exceeding guidance, and a 1% YoY growth in the industrial segment. The company’s China sales rebounded after a temporary pause due to trade tensions, contributing 15% of total revenue. CEO Sunny Sanyal highlighted strong cargo inspection demand and a healthy outlook for FY25. Non-GAAP gross margin expansion to 34% and $8M operating cash flow further reinforced confidence. B.Riley’s upgraded price target to $16 reflects optimism about margin sustainability and China’s resuming orders post-trade tensions.

Healthcare Equipment Sector Mixed as Varex Outperforms
The healthcare equipment sector remains fragmented, with Medtronic (MDT) up 0.82% but lagging Varex’s 22.79% surge. While Varex’s industrial and China-driven growth story stands out, peers face challenges like EU tariff risks and inventory destocking. The sector’s focus on innovation—such as AI in diagnostics and automation—aligns with Varex’s photon-counting CT investments, but its debt reduction and cash flow discipline provide a unique edge.

Options Playbook: Leveraging Varex's Volatility for Gains
• RSI: 60.44 (neutral) • MACD: -0.22 (bearish) • 200D MA: $11.27 (above) • Bollinger Bands: $6.88–$8.25 (current price at $9.59, above upper band)

Varex’s technicals suggest a short-term bullish trend amid long-term bearish pressure. Key levels to watch: 200D MA at $11.27 (resistance) and Bollinger upper band at $8.25 (support). The 30D RSI at 60.44 indicates neutrality, but the 200D MA crossover suggests a potential reversal if the stock breaks above $11.27. Given the 22.79% surge, options with moderate leverage and high gamma are optimal for capitalizing on volatility.

Top Option 1: VREX20250815C10
• Expiration: 2025-08-15 • Strike: $10 • IV: 98.23% • Delta: 0.4067 • Theta: -0.0501 • Gamma: 0.299982 • Turnover: 413
• IV (high volatility) • Delta (moderate sensitivity) • Gamma (high sensitivity to price swings)
This call option offers high leverage (27.40%) and gamma (0.299982), ideal for a short-term rally. A 5% upside to $9.75 would yield a payoff of $0.75 per contract, amplifying gains if the stock breaks above $10.

Top Option 2: VREX20251121C10
• Expiration: 2025-11-21 • Strike: $10 • IV: 27.87% • Delta: 0.4515 • Theta: -0.0042 • Gamma: 0.2749 • Turnover: 0
• IV (moderate volatility) • Delta (moderate sensitivity) • Gamma (high sensitivity)
This longer-dated call balances time decay (theta of -0.0042) with gamma of 0.2749, offering exposure to a sustained move above $10. A 5% upside would yield $0.75 per contract, with lower time decay compared to the August 15 contract.

Hook: Aggressive bulls may consider VREX20250815C10 for a short-term pop above $10, while VREX20251121C10 suits a measured bet on sustained momentum.

Backtest Varex Imaging Stock Performance
The VREX ETF has historically shown mixed performance after experiencing a significant intraday surge of 23% or more. While the 3-Day win rate is relatively high at 46.83%, the 10-Day win rate drops to 48.94% and the 30-Day win rate decreases further to 49.30%. This suggests that while the ETF tends to move positively in the short term following a strong intraday gain, its longer-term performance is more volatile and less consistently positive.

Varex's Surge: A Short-Term Play with Long-Term Potential
Varex’s 22.79% surge is fueled by Q3 outperformance and China demand optimism, but technicals suggest caution. The 200D MA at $11.27 and Bollinger upper band at $8.25 are critical levels to watch. While the stock’s short-term bullish trend aligns with options like VREX20250815C10, long-term investors should monitor debt reduction progress and industrial segment growth. Medtronic’s 0.82% rise underscores sector resilience, but VareX’s unique catalysts—cargo inspection demand and margin expansion—position it for outperformance. Action: Target a break above $9.62 (intraday high) or a drop below $7.56 (Bollinger middle band) to refine entry/exit strategies.