Stifel cuts Avantor stock rating to hold, slashes target to $14

Published 28/04/2025, 08:04
Stifel cuts Avantor stock rating to hold, slashes target to $14

On Monday, Stifel analysts downgraded Avantor Inc . (NYSE:AVTR) stock from Buy to Hold, significantly reducing the price target to $14 from the previous $26. The decision came after Avantor reported disappointing first-quarter results and lowered its top-line organic growth forecast by 200 basis points. The stock, currently trading at $12.93 with a market cap of $8.8 billion, has declined over 13% in the past week alone, according to InvestingPro data. According to Stifel, the overall picture presented by the earnings call and results was concerning, with several issues impacting Avantor’s performance.

The analysts pointed out that growth in the bioprocess sector, which is considered a key area of potential for the Tools industry, is not meeting expectations. Furthermore, the company seems to be struggling with the impact of tariffs, which may not be fully accounted for in its current strategy. Avantor is also in the process of optimizing its pricing improvement strategies, which are essential for managing the effects of the ongoing trade war.

Additionally, there are indications that Avantor is losing market share, and management changes are taking place within the company. While Avantor remains the most affordable stock in its group, trading at a P/E ratio of 12.4x, the analysts believe that the prospect of a new CEO could bring about renewed interest in the future. According to InvestingPro analysis, the stock appears undervalued at current levels, with additional insights and a comprehensive Pro Research Report available for subscribers. However, for the time being, analysts see too many uncertainties and consider other high-quality names in the Tools sector, which are trading at discounted multiples, to be more favorable options for investors.

Stifel’s revised target price of $14 reflects a significant decrease from their earlier $26 target, signaling a more cautious stance on the company’s stock. Avantor’s challenges, such as lagging growth in the bioprocess area and unresolved tariff impacts, have led to this reassessment of the company’s outlook. The analysts underscore the potential for interest to pick up again once a new CEO is in place and the company’s strategies are more clearly defined.

In other recent news, Avantor Inc. reported its first-quarter 2025 earnings, revealing a revenue miss that fell short of market expectations. The company posted earnings per share of $0.23, which aligned with forecasts, but its revenue came in at $1.58 billion, missing the anticipated $1.61 billion. Despite these challenges, Avantor maintained its full-year EPS guidance. The company is also expanding its cost transformation initiative, aiming for $400 million in savings by 2027. Avantor’s CEO, Michael Stubblefield, announced plans to step down, initiating a search for his successor. The Lab Solutions segment experienced a 3% decline in revenue, contributing to the company’s overall performance issues. Additionally, Avantor reaffirmed its full-year guidance, projecting organic revenue growth between -1% and +1%. The company has been facing significant challenges, including market headwinds and increased competition in the lab solutions market.

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