Yahoo Finance Three Reasons to Retain Avantor (AVTR) Stock in Your Portfolio
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 2023 and operational workflow also looks promising. Headwinds resulting from stiff competition and regulatory requirements are major downsides.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 18.7% compared with the 5.2% rise of the industry and 31.4% growth of the S&P 500.
The renowned provider of mission-critical products and services has a market capitalization of $16.98 billion. The company projects 15.7% growth for the next five years and expects to witness continued improvements in its business. Avantor surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and broke even once, delivering an earnings surprise of 3.4%, 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 more than 45 global manufacturing facilities, including 19 facilities that are current Good Manufacturing Practice (cGMP) 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 continued strong growth in sales to its higher education customers and the biomaterials platform during the fourth quarter of 2023. On the earnings call, management confirmed that Avantor renewed multiyear agreements with two significant semiconductor customers. It also launched innovative new products, including its J.T.Baker Viral Inactivation Solution, to address a critical regulatory need in bioprocessing and next-generation coatings and custom resins for 3D printing as part of its NuSil high-purity silicone platform.
Downsides
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. Its 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.
Regulatory Requirements: Avantor develops, configures and markets its products to meet customer needs driven by those regulations. It is subject to laws and regulations concerning cGMP and product safety. The company’s subsidiaries may be required to register for permits and/or licenses and may be required to comply with the laws and regulations of the FDA and other various state and foreign agencies, as well as certain accrediting bodies. Any significant change in regulations could reduce demand for its products or increase expenses.
Estimate Trend
Avantor has been witnessing a negative estimate revision trend for 2024. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved 5.6% south to $1.01.
The Zacks Consensus Estimate for first-quarter 2024 revenues is pegged at $1.68 billion, suggesting a 5.7% decline from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, Cardinal Health, Inc. CAH and Cencora, Inc. COR.
DaVita, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 74.7% compared with the industry’s 21.8% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 55.8% compared with the industry’s 15.2% rise in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 54.5% compared with the industry’s 5.2% rise in the past year.
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DaVita Inc. (DVA) : Free Stock Analysis Report
Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
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Avantor, Inc. (AVTR) : Free Stock Analysis Report
