Avantor (AVTR): A Strategic Pivot to Biotech and Tech Growth

The life sciences and advanced technology sectors are in the midst of a historic boom, fueled by rising demand for biopharmaceuticals, gene therapies, and semiconductor-driven innovation. Amid this surge, Avantor (AVTR) is positioning itself as a critical enabler of these trends—yet its stock remains undervalued relative to its growth potential. This week’s RBC Capital Markets Global Healthcare Conference fireside chat with CFO Brent Jones offers a rare opportunity to reassess Avantor’s trajectory, particularly its underappreciated market share gains, margin expansion roadmap, and partnerships that are accelerating R&D-to-commercialization cycles. For investors, the May 20 webcast could be a catalyst to unlock AVTR’s true worth—and justify a strategic buy entry ahead of Q2 earnings.

Market Share Gains: A Silent Takeover in Critical Markets

Avantor’s bioprocessing segment, which generates ~67% of its Bioscience Production revenue, is experiencing high single-digit organic growth for the fourth consecutive quarter—a trend Brent Jones emphasized as “sustained” in recent quarters. This dominance stems from strategic contract wins with top-tier pharma clients, including a partnership with a top 10 global pharma company for its AI-driven lab services. These wins reflect Avantor’s ability to lock in long-term relationships in a space where 80% of biopharma production costs are tied to consumables like process chemicals and single-use systems—products where Avantor holds a leadership position.

Beyond biopharma, Avantor’s Total Science Solutions platform is expanding its reach through partnerships like LGC Standards (15,000 certified reference materials) and Quantum-Si (single-molecule protein sequencing tech). These deals not only diversify its revenue streams but also embed Avantor deeper into customers’ workflows—a “beaker-to-bulk” strategy that reduces switching costs and solidifies market share.

Margin Expansion: The Cost Discipline Payoff

Avantor’s financial discipline is equally compelling. In 2024, the company delivered $130 million in annualized gross savings through its cost transformation program, with a $250 million+ target by year-end 2025. This efficiency, paired with pricing power in high-margin bioprocessing, is driving adjusted EBITDA margins toward 18%–19%—up from 17.7% in 2024.

The path to margin expansion is clear:
1. Operational Leverage: Automation at its New Jersey distribution center reduced processing times by 30%, while the Poland facility lowers production costs for high-demand biopharma products.
2. Portfolio Shift: Bioprocessing’s growth outpaces slower-moving segments, improving revenue mix.
3. Deleveraging: Free cash flow of $650–700 million in 2025 will slash net leverage below 3x by year-end—a key threshold for rating upgrades and lower borrowing costs.

R&D-to-Commercialization: The Engine of Future Growth

Avantor’s AI-driven services and product launches highlight its role as a critical partner in accelerating R&D cycles. Its generative AI platform, already deployed with a top pharma client, automates mundane lab tasks, freeing researchers to focus on drug discovery. Meanwhile, innovations like the Masterflex Miniflex pumps and Novilytic’s Proteometer platform reduce development timelines for therapies like monoclonal antibodies and ADCs.

In a sector where 80% of biotech R&D fails to reach commercialization, Avantor’s end-to-end solutions—spanning lab supplies to production-scale materials—are irreplaceable. This “full stack” approach positions it as a “must-have” supplier for biopharma’s $400 billion pipeline of therapies in development.

Why the RBC Chat Matters Now

The May 20 RBC presentation is a critical inflection point for AVTR. Investors will scrutinize:
- Q2 2025 Bioprocessing Growth: Will it hit the mid-to-high single-digit target, signaling sustained demand?
- Cost Savings Progress: Are they on track to hit $250M+ annual savings?
- Partnership Pipeline: What new agreements are in the works with tech innovators like Quantum-Si?

AVTR’s stock trades at 10.5x 2025 EBITDA, a discount to peers despite its growth profile. With a 95% free cash flow conversion rate and a path to sub-3x leverage, the stock is primed for re-rating.

The Investment Case: Buy Now, Reap Later

The RBC webcast offers a rare chance to stress-test Avantor’s narrative against management’s direct commentary. For investors, the catalysts are clear:
- Near-Term: Q2 earnings could surprise with margin beats and bioprocessing outperformance.
- Long-Term: Its partnerships and automation initiatives are structural tailwinds in a $100B+ life sciences tools market.

With $700 million in free cash flow visibility and a stock price lagging its peers, AVTR is a buy at current levels. The RBC chat is the first step in a revaluation journey—act now before the market catches on.

AVTR is a strategic buy with a price target of $32–$35 by year-end 2025.

Final Note: The life sciences boom isn’t slowing down. Avantor’s role in it is underappreciated—and its May 20 presentation is the moment to act.