Here's Why You Should Retain Avantor (AVTR) Stock for Now
Avantor, Inc. AVTR is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism led by solid fourth-quarter 2022 and operational workflow also looks promising. Headwinds resulting from stiff competition and foreign exchange fluctuations are major downsides.
Over the past year, the Zacks Rank #3 (Hold) stock has lost 39.3% compared with the 30% decline of the industry and 15.2% fall of the S&P 500.
The renowned provider of mission-critical products and services has a market capitalization of $14.23 billion. The company projects 12.8% growth for 2024 and expects to witness continued improvements in its business. Avantor surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in one, delivering an earnings surprise of 3.9%, on average.
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Let’s delve deeper.
Operational Workflow: We are optimistic about Avantor’s more than 200 facilities strategically located worldwide, including manufacturing, distribution, service, research & technology and sales centers. The company operates over 30 global manufacturing facilities, including 16 facilities that are current good manufacturing practice compliant and 13 facilities that have been registered with the FDA or comparable foreign regulatory authorities.
Product Portfolio: We are optimistic about Avantor’s portfolio, which includes a comprehensive range of products and services that allows it to create customized and integrated solutions for its customers. These products and services enable the company’s customers to achieve precise analytical results in their operations.
Avantor’s e-commerce platform makes it easy for customers to do business with the company and enables digital marketing efforts that position it to capture new demand.
Strong Q4 Results: Avantor registered a robust year-over-year uptick in overall and segmental core organic sales in fourth quarter of 2022. Strength in Avantor’s end markets was also witnessed. The company’s pipeline of new product launches and robust demand from its bioproduction customers for its end-to-end fluid management solution also raise optimism. The continued demand for Avantor’s Ritter and Masterflex products also augurs well. The expansion of both margins bodes well.
Stiff Competition: Avantor faces competition across its products and the markets in which it operates. The company competes on various fronts, both domestically and internationally, including competing with other companies providing similar offerings. Avantor’s competitors range from regional to large multinational companies. Such greater resources may allow Avantor’s competitors to respond more quickly with new, alternative or emerging technologies.
Forex Woes: A substantial amount of Avantor’s revenues is derived from international operations. Avantor also anticipates that a significant portion of its sales will continue to come from international markets in the future. The revenues reported by Avantor with respect to its operations outside of the United States may be affected by fluctuations in foreign currency exchange rates.
Avantor has been witnessing a positive estimate revision trend for 2023. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 0.7% north to $1.41.
The Zacks Consensus Estimate for first-quarter 2023 revenues is pegged at $1.77 billion, suggesting a 9.4% decline from the year-ago reported number.
This compares to our first-quarter 2023 revenue estimate of $1.76 billion, suggesting a 9.5% decline from the year-ago quarter’s reported number.
Some better-ranked stocks in the broader medical space are Hologic, Inc. HOLX, Edwards Lifesciences Corporation EW and Avanos Medical, Inc. AVNS.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 4.9% against the industry’s 17.9% decline in the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed in one and matched in the other, the average beat being 1.7%.
Edwards Lifesciences has lost 30.7% compared with the industry’s 17.9% decline over the past year.
Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has lost 14.3% compared with the industry’s 17.9% decline over the past year.
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