Is Avantor (AVTR) a Hidden Gem Amid the Drop? Analysts See Upside Despite Challenges
19min read The stock market’s relentless churn often creates opportunities in unlikely places. Take avantor, Inc. (AVTR), which has fallen nearly 40% year-to-date as of early May . Despite the slump, analysts are still bullish, with a "Moderate Buy" consensus and a projected 32.64% upside. But is this a contrarian play worth taking—or a trap for the unwary?
Analyst Ratings: A Mixed Bag, but Bulls Outnumber Bears
AVTR’s current price of $12.96 places it near its 52-week low of $12.20, with a 52-week high of $28.00. Analysts are divided but broadly optimistic. The average 12-month price target is $17.23, implying a 33.88% upside, while the median target is $24.00. Notably, 21 analysts recommend buying, compared to just 10 holds and zero sells.
However, recent downgrades highlight near-term concerns. RBC Capital cut its price target to $20.00 from $31.00 in late April, citing revenue headwinds, while Barclays lowered its target to $15.00. Yet both maintained Buy ratings, underscoring long-term optimism tied to AVTR’s niche in biopharma and lab solutions.
Ask Aime: Is it smart to buy Avantor stock now?
Stock Performance: A Rocky Start to 2025
AVTR’s stock has been battered by sector-wide pressures:
- Q1 2025 Revenue: Dropped 5.9% YoY to $1.58B, driven by an 8% decline in its core Lab Solutions segment.
- Earnings: Adjusted EPS rose to $0.23, slightly beating estimates, but margins remain strained.
- Guidance Cuts: Full-year organic revenue growth now projects 1% to -1%, down from earlier estimates of 1%–3%.
The CEO’s abrupt departure in April further spooked investors, compounding uncertainty around leadership and execution of cost-cutting plans.
Key Drivers: Why Analysts Still See Potential
Cost-Cutting Ambitions: AVTR aims to save $400M by 2027, focusing on fixed-cost reductions and operational efficiency. If successful, this could stabilize margins at 18%–19%, aligning with industry peers like Eastman Chemical (EMN) and Celanese (CE).
Biopharma Tailwinds: AVTR’s bioprocessing segment—a smaller but high-margin business—showed strong order growth in Q1, hinting at resilience in R&D spending.
Valuation Discount: Trading at a P/E of 15.6x versus a sector average of ~20x, AVTR appears undervalued. However, its PEG ratio of 14.3x suggests growth expectations are already baked into the price.
Debt Concerns: A debt/equity ratio of 71.0x is elevated, but AVTR’s $1.1B cash balance and stable cash flows mitigate immediate distress risks.
Analyst Takeaways: A Wait-and-See Game?
- RBC Capital: "AVTR’s long-term growth in biopharma and lab solutions justifies the Buy, but near-term revenue pain remains."
- Wells Fargo: "Strategic shifts to high-margin segments could pay off—if management executes amid leadership changes."
- Barclays: "The stock is undervalued, but patience is required. Risks are elevated until tariffs and supply chains stabilize."
Risks and Reality Check
- Trade Policy Uncertainty: Tariffs on Chinese imports continue to disrupt supply chains, squeezing lab and production costs.
- Leadership Transition: The CEO’s exit raises operational risks until a successor is firmly in place.
- Sector Competition: Peers like EMN (up 12% YTD) and CE (up 8% YTD) are outperforming AVTR, which has dropped 38%.
Conclusion: A High-Risk, High-Reward Bet
AVTR presents a compelling value proposition for investors willing to endure volatility. Its $17.23 average price target and $24 median target reflect optimism about margin improvements and biopharma demand. However, the 38% YTD decline, CEO turnover, and macroeconomic risks mean this is not a "set-and-forget" investment.
For bullish investors, the stock’s 15.6x P/E and $11B market cap offer a margin of safety if cost-cutting and bioprocessing growth materialize. For cautious traders, waiting for clearer guidance or stabilization in trade policies might be prudent.
In short, AVTR is a speculative play for those betting on a rebound in lab and biopharma spending—and a patient management team to deliver it.
Data as of May 2, 2025. Past performance does not guarantee future results.
