Last Update 14 Dec 25

AVTR: Share Repurchases Will Drive Upside As Turnaround Visibility Improves

Analysts have modestly lowered their price targets on Avantor by a few dollars per share, generally to the low to mid teens in dollar terms. They cite reduced guidance, weaker quarters and limited visibility around the company’s turnaround and strategic review.

Analyst Commentary

Street research on Avantor has turned more mixed, with several firms stepping to the sidelines while a smaller group remains constructive on the company’s long term recovery and valuation upside. The divergence largely hinges on confidence in management’s ability to execute its turnaround and deliver sustainable growth beyond the current soft patch.

Bullish Takeaways

Bullish analysts see room for multiple expansion if Avantor can demonstrate even modest reacceleration in growth. Recent price target increases into the mid to high teens imply confidence that the trough in earnings may be near.
Some models assume a gradual recovery in end markets through 2026 and 2027. This suggests that current estimates may already discount a slower rebound and creates potential upside if demand stabilizes sooner than expected.
Supportive research ahead of recent earnings updates indicates that the company’s long term positioning in life sciences and specialty chemicals could still sustain above market growth, once operational and macro headwinds normalize.
Maintained Outperform ratings from a subset of the Street signal that, despite near term noise, there is belief that management’s strategic actions and cost discipline can eventually translate into better margin and cash flow performance.

Bearish Takeaways

Bearish analysts highlight repeated quarters of weak sales and guidance cuts as evidence that execution risk is elevated and that the earnings base may be less reliable than previously thought.
The shift to more neutral rating stances, including from JPMorgan with a trimmed price target around the low teens, reflects reduced conviction in the timing and visibility of a turnaround and limits near term re rating potential.
There is concern that transitory and idiosyncratic issues, such as operational headwinds in process chemicals, may persist longer than management expects, dampening both growth and margin recapture.
With the strategic review still in early stages and the company reluctant to commit to specific growth targets for next year, some on the Street see limited catalysts and prefer to wait for clearer evidence of a credible revival plan before recommending the shares more aggressively.

What's in the News

Raymond James downgraded Avantor to Market Perform from Outperform after a disappointing quarter, citing reduced guidance, execution risk, and limited visibility into a turnaround (Raymond James research note).
Avantor opened a new Centralized Service Center in Watertown, Massachusetts, expanding its off site lab services network to help Greater Boston research institutions free up lab space and streamline non core operations (Business Expansions).
A securities fraud class action lawsuit was filed alleging Avantor misled investors about its competitive positioning and the impact of rising competition, following multiple revenue misses, guidance cuts, and a large goodwill impairment (Lawsuits & Legal Issues).
Avantor launched pre engineered PUPSIT assemblies and a sterile sampling suite aimed at reducing contamination risk and standardizing bioprocess sampling and integrity testing across single use and hybrid facilities (Product Related Announcements).
The company issued 2025 guidance calling for organic revenue to decline 3.5% to 2.5%, while simultaneously announcing authorization for up to $500 million in share repurchases with no set expiration (Corporate Guidance and Buyback Announcements).

Valuation Changes

Fair Value Estimate remains unchanged at approximately $13.64 per share, indicating no material revision to the intrinsic value assessment.
The discount rate has risen slightly from about 8.87% to 8.88%, reflecting a marginally higher required return on Avantor’s equity.
Revenue growth is effectively unchanged at roughly 2.00% annually, signaling consistent expectations for modest long term top line expansion.
Net profit margin is essentially flat at about 12.68%, suggesting stable assumptions for long run profitability.
The future P/E has risen slightly from approximately 13.60x to 13.61x, implying a modestly higher multiple applied to forward earnings.

Strong demand from pharma and biotech, coupled with innovation and digital transformation, positions Avantor for sustained revenue and customer growth.
Cost transformation and investment in specialized solutions are set to drive margin improvement and capitalize on higher-value market segments.
Aggressive price cuts, bioprocessing setbacks, and margin pressures amid weak demand and high leverage threaten profitability, growth prospects, and financial flexibility.

Catalysts

About Avantor

Engages in the provision of mission-critical products and services to customers in the biopharma, healthcare, education and government, advanced technologies, and applied materials industries in the Americas, Europe, Asia, the Middle East, and Africa.What are the underlying business or industry changes driving this perspective?

The global growth in demand for biopharmaceuticals and healthcare solutions is being reinforced by Avantor's major contract wins and extensions with large pharma and biotech consortia. These positions Avantor to capture greater market share as end-market funding and patient procedures return to normalized or higher levels, creating sustained potential for above-market revenue growth.
Increasing investments in R&D, both in established regions and emerging markets, are expanding demand for laboratory consumables and specialized production materials. Avantor's ongoing product innovation and digital transformation (such as proprietary AI-powered product discovery and seamless digital buying platforms) are expected to drive improved customer retention, new customer wins, and long-term revenue expansion.
Avantor's multi-year cost transformation initiative, targeting $400 million in run-rate savings by 2027, coupled with operational efficiency measures and digital infrastructure upgrades, is likely to drive significant margin expansion and enhance free cash flow in coming years, offsetting current competitive pricing pressures.
The continued acceleration of biologics, gene therapies, and personalized medicine creates an increasing need for specialized and single-use solutions-an area where Avantor is investing in market-leading platforms and expanding innovation, positioning the company to benefit from secular end-market growth and product mix shift toward higher-margin segments, supporting margin and earnings growth.
The current pricing strategy to gain/secure large enterprise contracts is temporarily pressuring margins but is expected to pay off as higher volumes drive better operating leverage and customer lock-in. When end-market growth returns and new share gains mature, net margins and earnings have substantial room to recover and expand.

Avantor Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Avantor's revenue will grow by 2.5% annually over the next 3 years.
Analysts assume that profit margins will shrink from 10.3% today to 6.4% in 3 years time.
Analysts expect earnings to reach $461.3 million (and earnings per share of $0.86) by about August 2028, down from $687.4 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.6x on those 2028 earnings, up from 11.1x today. This future PE is lower than the current PE for the US Life Sciences industry at 32.3x.
Analysts expect the number of shares outstanding to grow by 0.28% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.18%, as per the Simply Wall St company report.

Avantor Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Intensifying competitive pressures in the laboratory solutions segment are leading Avantor to aggressively cut prices and offer upfront rebates to secure large contract extensions, compressing gross and EBITDA margins and raising the risk of prolonged profitability declines.
Persistent headwinds in the bioprocessing business-including elongated customer recoveries in new modalities (gene therapy, mRNA), regulatory uncertainties, and unexpected large customer-specific setbacks-have resulted in bioprocessing revenue being flat year-over-year instead of delivering expected high-single-digit growth, pointing to vulnerability in both top-line growth and long-term market share.
Guiding for negative to flat organic revenue growth in 2025 and acknowledging continued macro-driven funding and policy headwinds across major end markets (biotech, academia, large pharma) highlights the ongoing risk that weak industry demand and slow recovery may constrain revenues for several more years.
Margin pressures are being amplified by unfavorable product mix, elevated supply chain expenses, and under-absorption of fixed costs due to less-than-expected volume growth, which are offsetting cost efficiency gains and threatening future earnings and free cash flow.
The company's elevated net leverage (3.2x adjusted EBITDA) and reduced free cash flow guidance, exacerbated by upfront contract rebates, could limit financial flexibility and deleveraging progress, particularly in an environment where interest rates remain high or the competitive environment further compresses margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $14.118 for Avantor based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $19.0, and the most bearish reporting a price target of just $12.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $7.2 billion, earnings will come to $461.3 million, and it would be trading on a PE ratio of 26.6x, assuming you use a discount rate of 8.2%.
Given the current share price of $11.18, the analyst price target of $14.12 is 20.8% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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