Friday, Avantor Inc AVTR reported Q2 adjusted EPS of $0.28, missing the consensus of $0.29. Sales decreased 8.7% (core organic decline of 6.5%) to $1.74 billion, below the consensus of $1.80 billion.
Adjusted net income was $186.4 million compared to $251.5 million in the prior period.
William Blair analyst Matt Larew said the miss and guidance reduction was not unexpected (they viewed Avantor's guide as one of the most at-risk in the space), given commentary from competitors and industry diligence.
The stock sold off 7% on Friday and trades at just 14.1 times EBITDA, compared to peers at roughly 16.5 times.
The analyst has downgraded to Market Perform from Outperform due to the context of industry diligence at bioprocessing conferences over the last several months that highlight a challenging competitive environment for the company, particularly in fluid management.
The disappointing results from Avantor's recent acquisitions have added pressure on its financial state at a time when various high-quality life sciences assets are likely to be accessible due to the challenging macroeconomic climate.
The company expects core organic revenue to decline 6.5%-4.5% in 2023 (previously -0.5% to +1.5%), implying revenue of between $6.89 billion and $7.04 billion.
Given the limited end-market visibility and lack of confidence in Avantor's competitive positioning, the analyst models on the lower end of the range, with a 6.1%core organic decline and revenue of $6.904 billion.
Price Action: AVTR shares are down 3.55% at $20.53 on the last check Monday.
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