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On Monday, Bernstein analysts adjusted the price target for Avantor Inc . (NYSE:AVTR) shares, reducing it to $22 from the previous $24.50, while keeping a Market Perform rating on the stock. The revision follows the company’s report of a weaker-than-expected performance in its Laboratory Solutions business, which did not meet expectations and saw a year-over-year decline after exhibiting growth in the previous quarter. According to InvestingPro data, the stock has fallen over 12% in the past week and is trading near its 52-week low of $19.09, with technical indicators suggesting oversold conditions.
The analysts pointed out that the Laboratory Solutions segment’s underperformance is particularly concerning as it constitutes two-thirds of Avantor’s business. This weakness could potentially impact the company’s ability to achieve its full-year 2025 guidance of 1-3% organic growth, although the guidance remains reasonable. Analysts expressed concerns about Avantor’s market position, suggesting that the narrative of the company potentially losing market share could persist without concrete data to confirm or deny the situation. The company’s current revenue stands at $6.78 billion, with a 2.64% year-over-year decline.
Despite these challenges, Avantor demonstrated significant operational expense control, impressing analysts by achieving the lower end of its annual revenue guidance but landing in the middle of its range for earnings per share (EPS). This indicates a strong management of operating leverage, as the company reported quarterly results that were 1.5% below consensus on revenue but 2.5% above consensus on adjusted EBITDA dollars.
Another positive highlight from Avantor’s report was the company’s free cash flow conversion, which reached 110%. The company has been actively using its cash flow to reduce debt, and is approaching its target leverage ratio of 3 times. The strong cash flow conversion and focus on deleveraging remain key strengths for Avantor as it navigates through its current challenges.
In other recent news, Avantor Inc. reported its fourth-quarter 2024 results, which exceeded earnings expectations but fell short in terms of revenue. The company posted adjusted earnings per share of $0.27, surpassing the analyst estimate of $0.26. However, revenue for the quarter was $1.69 billion, missing the consensus estimate of $1.71 billion, a 2% decrease year-over-year. For the full year, Avantor reported net sales of $6.78 billion, a 3% decrease compared to the previous year.
In other developments, Stifel analysts recently revised their price target for the company to $26 from the previous $28, while maintaining a Buy rating. This change follows Avantor’s management commentary on their 2025 EBITDA goals, which analysts found unexpectedly ambitious. Despite the reduced price target, Stifel emphasized Avantor’s attractive valuation and minimal exposure to the Chinese market as reasons for maintaining their rating.
These are among the recent updates concerning Avantor, which continues to focus on its strategies for achieving its ambitious EBITDA goals. Stifel remains optimistic about Avantor’s long-term prospects based on its strategic position and market fundamentals.
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