Avantor Inc. (AVTR) PT Lowered to $22 at Bernstein SocGen Group
Bernstein SocGen Group analyst Eve Burstein lowered the price target on Avantor Inc. (NYSE: AVTR) to $22.00 (from $24.50) while maintaining a Market Perform rating.
The analyst comments "Weakness in Avantor’s Laboratory Solutions business was the big concern this quarter: The segment missed expectations and quarterly guidance, and declined YoY (after a quarter of growth in Q3). While some pull-forward of orders in Q3 might’ve been involved, this does not bode well for a recovery story, and will continue to raise questions about share loss vs Thermo - as we wrote in our 2025 outlook, “Some of the big overhangs on Avantor’s stock will continue to be difficult to shake in 2025… [for example,] the narrative that Avantor may be losing share in the channel will likely continue to persist (for 2025 and beyond), as true data to support or refute this hypothesis is very difficult to come by.” Additionally, given that the lab business is 2/3 of the company, a negative exit rate for 2024 makes the full company’s FY25 guide of 1-3% organic growth reasonable, but not conservative. However, there were still two strong reasons to like the print. First, the company displayed very strong OpEx control: For a company with such high operating leverage to come in at the bottom end of their annual guidance range for revenue, but the middle of their range for EPS, is quite impressive (said differently, coming in for the quarter 1.5% below consensus on revenue but 2.5% above consensus on adjusted EBITDA dollars is no easy feat). Second, free cash flow conversion was excellent: The company ended up with 110% free cash flow conversion, which was put to work towards debt repayment. Deleveraging was a stated priority of the company and the 3x leverage target is not far."