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Avantor's (AVTR) New Tie-Up to Improve Lab Inventory Management

Avantor, Inc. AVTR recently announced its entry into an agreement with Labguru. The collaboration aims to integrate Avantor's Inventory Manager (IM) and e-commerce channel into Labguru's Lab Information Management Software and Electronic Lab Notebook (ELN).

Avantor and Labguru's combined solution will offer a single source for scientists to access a wide range of high-quality products when needed at the lab bench. It is worth mentioning that Labguru is a research-to-production platform for leading global pharma, national research institutes and innovative startups.

The latest partnership is expected to significantly boost Avantor’s Clinical Services business on a global scale.

Rationale Behind the Collaboration

Avantor's IM is a proprietary, vendor-agnostic cloud-based software designed to serve as the central transactional and intelligence hub for lab inventory management. IM provides real-time reporting and customized, on-demand replenishment of lab consumables.

Following the tie-up, IM will now likely be able to integrate with ELNs from multiple providers. By integrating IM with Labguru, scientists who use their ELN will likely be able to easily view, check available stock and order products via Avantor's e-commerce channel. This is expected to aid customers while streamlining their lab workflows and driving efficiencies.

Per management, the company is focused on providing researchers and scientists with a more streamlined and efficient way to manage their inventory and purchase research materials from Avantor via Labguru's ELN platform. The integration will likely enable Avantor to further enhance the user experience for researchers and provide them with a single source for their lab research needs.

Labguru's management feels the partnership with Avantor will likely empower scientists and eliminate friction by providing efficiencies and data-based insights.

Industry Prospects

Per a report by Precision Business Insights, the healthcare inventory management software market was valued at $22.1 billion and is expected to witness a CAGR of 5.4% between 2022 and 2028. Factors like the increasing demand for cloud-based medical inventory software and the growing need for healthcare organizations to manage their inventories effectively are likely to drive the market.

Given the market potential, the latest partnership is expected to significantly strengthen Avantor's business worldwide.

Notable Developments

In April, Avantor announced its first-quarter 2023 results, wherein it registered a year-over-year uptick in its Europe and AMEA core organic sales. Strength in Avantor’s end markets was also recorded.

In January, Avantor entered into a multi-year supply and services agreement with Catalent. Under the terms of the agreement, Avantor will be the primary supplier of a broad range of laboratory supplies, clinical and production materials and services to Catalent, thereby expanding their existing relationship.

Price Performance

Shares of Avantor have lost 33.3% in the past year compared with the industry’s 18.4% decline. The S&P 500 recorded 7.1% growth in the said time frame.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Stocks to Consider

Currently, Avantor carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Merit Medical Systems, Inc. MMSI and Boston Scientific Corporation BSX.

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic has gained 4.1% compared with the industry’s 4.7% rise in the past year.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.

Merit Medical has gained 43.1% compared with the industry’s 8.1% rise over the past year.

Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.

Boston Scientific has gained 33.7% against the industry’s 29.4% decline over the past year.

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