Is Avantor (AVTR) Now Offering Value After Steep Multi‑Year Share Price Decline?

• If you are looking at Avantor and wondering whether the recent share price offers value or a value trap, this article walks you through what the current price might be saying.
• The stock recently closed at US$12.08, with returns of 5.4% over the past week and 12.8% over the past month. That sits against a 45.4% decline over the last year and a 58.6% decline over five years.
• Recent coverage around Avantor has focused on its role in supplying materials and services to biopharma, healthcare and advanced technologies, alongside market discussions about how demand trends could influence sentiment toward the stock. These themes help frame why the share price has moved recently and why some investors are rechecking their assumptions on value and risk.
• On our checks, Avantor has a valuation score of 4/6. This suggests several areas where the market price and our estimates differ, and we will walk through those methods before finishing with a way of looking at value that pulls the whole picture together.

Find out why Avantor's -45.4% return over the last year is lagging behind its peers.

Approach 1: Avantor Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business could be worth today by projecting its future cash flows and discounting them back to a present value.

For Avantor, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The company’s latest reported free cash flow is about $508.6 million. Analysts provide free cash flow estimates out to 2026, at $618.7 million, and Simply Wall St extrapolates these further, with projections reaching about $612.5 million in 2035, all in US$.

Pulling those projections together, the DCF model arrives at an estimated intrinsic value of US$12.64 per share. Compared with the recent market price of US$12.08, that implies Avantor trades at roughly a 4.4% discount to this DCF estimate, indicating that the shares are close to what this cash flow based model would consider fair value.

Result: ABOUT RIGHT

Avantor is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Avantor.

Approach 2: Avantor Price vs Sales

For companies where earnings can be distorted, the P/S ratio is often a useful way to compare what the market is paying for each dollar of revenue. It sidesteps short term swings in profit, while still reflecting how investors view growth potential and business quality.

Growth expectations and risk usually drive what looks like a “normal” valuation multiple. Higher expected growth and lower perceived risk tend to justify a higher P/S, while slower growth or higher uncertainty often line up with a lower multiple.

Avantor currently trades on a P/S of 1.25x, compared with the Life Sciences industry average of 3.70x and a peer group average of 7.54x. Simply Wall St’s Fair Ratio for Avantor is 2.56x. The Fair Ratio is a proprietary estimate of what the P/S could be, given factors such as earnings growth, industry, profit margins, market cap and specific risks.

Because the Fair Ratio folds in these company specific drivers, it can be more tailored than a simple comparison with peers or the broad industry, which may have very different profiles.

On this basis, Avantor’s current 1.25x P/S sits below the 2.56x Fair Ratio. This suggests the shares are trading below this Fair Ratio based assessment.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Avantor Narrative

Earlier we mentioned that there is an even better way to think about valuation, and on Simply Wall St that is through Narratives. With Narratives, you set a clear story for Avantor, link that story to your own revenue, earnings and margin assumptions, and let the platform translate it into a fair value that you can compare with the current price on the Community page. Narratives update automatically when fresh news or earnings arrive, so different investors can see, for example, how a more optimistic view that lines up with a US$19.00 fair value target contrasts with a more cautious stance closer to US$12.00 and then decide for themselves what that gap between fair value and market price means for their next move.

Do you think there's more to the story for Avantor? Head over to our Community to see what others are saying!

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.

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