Citi Says Avantor (AVTR) Selloff is 'Overdone', Upgrades to Buy

October 5, 2022 9:45 AM EDT
Get Alerts AVTR Hot Sheet
Price: $21.81 -0.05%

Rating Summary:
    20 Buy, 3 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 10 | Down: 17 | New: 52
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Citi analyst Patrick Donnelly upgraded shares of Avantor (NYSE: AVTR) to Buy from Neutral with a $28 per share price target.

The upgrade comes as Avantor shares trade over 30% lower since the end of July. Donnelly described this underperformance as “significant,” and sees disconnected valuation.

“We believe current valuation appropriately accounts for the M&A revenue shortfall and downside risk to core numbers. Further, we see a potential clearing event for AVTR stock if management formally sets a more appropriate floor for FY23 organic revenue growth guidance on the earnings call on the lower end of the company’s long-term +4-6% organic growth target range,” Donnelly said in a client note.

On the other hand, the analyst cut the rating on Sotera Health Company (NASDAQ: SHC) to Neutral from Buy with the price target going to $9 from $25. The upgrade move comes on the back of a recent jury verdict in the Kamuda trial in Illinois that went against SHC with the company ordered to pay about $100 million for damages associated with decades of toxic air pollution near its former Willowbrook sterilization facility.

“The loss of the Kamuda trial appeal and subsequent trial losses would have a materially negative impact on Sotera’s balance sheet and liquidity position moving forward, in our view. Given the increased risk we move to the sidelines,” Donnelly further explained in a note.

SHC shares are down over 8% today while Avantor stock is up more than 1%.

By Senad Karaahmetovic

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