Avantor Inc. (AVTR) PT Raised to $27.50 at Evercore ISI

Evercore ISI analyst Vijay Kumar raised the price target on Avantor Inc. (NYSE: AVTR) to $27.50 (from $27.00) while maintaining a Outperform rating.

The analyst comments "While AVTR did not comment on orders, this was mostly a function of the number being less relevant (most orders get converted to revs in 2 to 3 mon); the rev perf supports HSD QoQ order growth, implying B2B was ~1x. Overall Bioprocessing, fluid handling (peristaltic pumps) & single use tech grew healthily on both YoY and QoQ basis…we think this is an encouraging leading indicator of customer activity levels picking up. Relative to destocking, mgmt. noted it should largely be done in 2Q barring isolated pockets, which is consistent w DHR’s messaging. The ST had feared whether API/bulk orders from pharma (based on finished goods remaining elevated at pharma comments) was a new HW…mgmt. noted that this was not a new phenomenon and there was no change in messaging or expectations. While overall Guide for the year was unchanged (BPS outlook improved slightly offset by softer Lab Soln), the focus for investors will be on 4Q exit rate. Based on our math, Bioprocess should be exiting at HSD rates while Lab Soln should grow LSD…these trends bode well for the FY25 setup. The other notable highlight for us was OMx Beat…mgmt. noted cost saving programs were ahead of plan; more impressively, the 1H FCF conversion of ~108% should provide a ton of confidence in earnings quality. Given these elements, we tweaked up our PT to $27.50, which equates to 25x blended fwd P/E (& ~3.8% FCF yield, which is ~20% discount to TMO)."

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