Is Avantor, Inc. (NYSE:AVTR) Potentially Undervalued?

Today we're going to take a look at the well-established Avantor, Inc. (NYSE:AVTR). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$33.38 at one point, and dropping to the lows of US$24.46. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Avantor's current trading price of US$25.87 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Avantor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Avantor

What's The Opportunity In Avantor?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.53% above my intrinsic value, which means if you buy Avantor today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $24.51, there’s only an insignificant downside when the price falls to its real value. Although, there may be an opportunity to buy in the future. This is because Avantor’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Avantor generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 67% over the next couple of years, the future seems bright for Avantor. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in AVTR’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on AVTR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you want to dive deeper into Avantor, you'd also look into what risks it is currently facing. Be aware that Avantor is showing 2 warning signs in our investment analysis and 1 of those can't be ignored...

If you are no longer interested in Avantor, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.