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Why Varex Imaging Stock Lost 17% in August

Demitrios Kalogeropoulos, The Motley Fool

What happened

Varex Imaging (NASDAQ: VREX) stock trailed the market last month by shedding 17% compared to a 2% decline in the S&P 500, according to S&P Global Market Intelligence. The drop has pushed shares to single-digit returns so far in 2019, although the stock rebounded to more solidly positive territory in early September.

A doctor examines a medical imaging monitor.
A doctor examines a medical imaging monitor.

Image source: Getty Images.

So what

August's slump was driven by the mixed fiscal second-quarter results that Varex issued on Aug. 6. The medical device specialist noted healthy demand in several markets including oncology and mammography imaging but saw a sharp drop-off in radiographic detectors. Overall, sales inched higher by 3% to $197 million. Adjusted profitability worsened slightly, falling to 34% of sales from 35% a year earlier.

Now what

CEO Sunny Sanyal said at the time that the latest results keep the company on pace to reach its broader 2019 sales goals, which involve revenue ranging from $760 million to $785 million compared to $773 million in 2018. Yet the small-cap stock is likely to remain volatile while sales growth is muted and while Varex implements its restructuring program through mid-2020.

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Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of Varex Imaging. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com