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Avantor, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
Avantor, Inc. (NYSE:AVTR) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 3.5% to hit US$1.7b. Avantor also reported a statutory profit of US$0.30, which was an impressive 150% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the most recent consensus for Avantor from 13 analysts is for revenues of US$6.86b in 2027. If met, it would imply a reasonable 3.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to expand 15% to US$0.57. In the lead-up to this report, the analysts had been modelling revenues of US$6.74b and earnings per share (EPS) of US$0.53 in 2027. So the consensus seems to have become somewhat more optimistic on Avantor's earnings potential following these results.
Check out our latest analysis for Avantor
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 12% to US$17.35. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Avantor, with the most bullish analyst valuing it at US$19.00 and the most bearish at US$16.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Avantor's past performance and to peers in the same industry. One thing stands out from these estimates, which is that Avantor is forecast to grow faster in the future than it has in the past, with revenues expected to display 2.7% annualised growth until the end of 2027. If achieved, this would be a much better result than the 3.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 7.0% annually for the foreseeable future. So although Avantor's revenue growth is expected to improve, it is still expected to grow slower than the industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Avantor following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Avantor's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Avantor analysts - going out to 2028, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Avantor , and understanding this should be part of your investment process.
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