AVTR: Turnaround Taking Shape, but Conviction Premature; Resume Coverage at Sector Perform

研报英文原文证据摘录

AVTR: Turnaround Taking Shape, but Conviction Premature; Resume Coverage at Sector Perform

was the first

in a while not accompanied by downward estimate revisions.

Torque to a market recovery. Avantor has one of the widest gaps between

current performance and historical trend in its peer group, suggesting

significant upside torque to any eventual improvement in end market

conditions. And we do expect some improvement in market conditions, due

to lapping of peak uncertainty in large pharma and academia, as well as the

improved biotech funding environment over the past 6+ months.

But even reduced Street forecasts don't strike us as fully de-risked.

Modeling modest margin expansion and a return to 3%+ organic sales

growth by 2028 -- meaningful improvements from current trend -- still puts

our forecast below the Street's. We think our estimates are reasonable

until we gain color on improved performance. As well, free cash flow is

an important metric for Avantor, and the company's guidance of $500M -

$550M for 2026 seems difficult to achieve following $39M (ex restructuring

costs) in Q1.

Valuation not demanding but deserved. While Avantor trades at a discount

to peers, we believe this discount is warranted absent performance

improvement. Our forecasted 2026-2028 organic sales CAGR of ~1.5% for

Avantor is comparable to only Bio-Rad's in the peer group, which averages

~5% over this timeframe. As such, we believe the current ~9x EV/2026e

EBITDA multiple (vs peers' ~14x) fairly reflects the gap in growth prospects.

Disseminated: May 14, 2026 16:02EDT; Produced: May 14, 2026 16:00EDT

For Required Conflicts Disclosures, see page 7

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