Avantor, Inc. AVTR is well-poised for growth in the coming quarters, courtesy of its strong product portfolio. The optimism led by solid fourth-quarter 2024 results and strategic deals also looks promising. However, headwinds resulting from the loss of a significant number of customers and forex volatility are major downsides.

Over the past six months, this Zacks Rank #3 (Hold) stock has lost 37%, underperforming the 13.2% decline of the industry and 1% growth of the S&P 500.

The renowned provider of mission-critical products and services has a market capitalization of $11.13 billion. The company expects 13.3% earnings growth for the next five years and to witness continued improvements in its business. Avantor’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering a surprise of 5.7%, on average.

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Factors Favoring AVTR’s Growth

Product Portfolio: Avantor offers a vast portfolio of high-value specialty products and services, enabling precise analytical results across research, diagnostics and quality control in highly regulated industries. Its e-commerce platform enhances customer engagement and demand capture, supported by the Avantor Business System for continuous improvement. The company’s high-purity J.T. Baker chemicals and NuSil silicones are trusted globally in life sciences, electronics and aerospace.

In the fourth quarter of 2024, Avantor launched a new AI-powered services offering to address pharma and biotech capacity challenges, introduced the Masterflex Miniflex Panel-Mount pumps to strengthen fluid handling and expanded its product availability with Quantum-Si’s next-gen protein sequencing in North America and LGC Standards’ 15,000 certified reference materials.

Strategic Deals: Avantor has secured several strategic deals to enhance its portfolio and industry presence. In the fourth quarter of 2024, management confirmed new third-party supplier agreements in the Solutions platform, including a partnership with LGC Standards to expand its reference materials offering. The company also signed an exclusive global distribution agreement with Novilytic for its Proteometer platform.

Additionally, in October 2024, Avantor expanded its partnership with the National Institute for Bioprocessing Research and Training to tackle biopharma manufacturing bottlenecks, particularly in monoclonal antibody downstream optimization, a key market for pharma drugs targeting diseases like cancer.

Strong Q4 Results: Avantor exited the fourth quarter of 2024 with better-than-expected earnings. The strength in Bioscience Production’s year-over-year net sales and order intake on a sequential basis during the quarter was impressive. AVTR also witnessed robust proprietary chemicals and specialty procurement sales within the Laboratory Solutions segment during the quarter. The expansion of both margins bodes well.

Factors That May Offset the Growth of AVTR

Loss of a Significant Number of Customers: Avantor’s operating results could be adversely affected by the loss of revenues from a significant number of its customers, including direct distributors and end users. If a significant number of customers purchase fewer of its products, defer orders or fail to place additional orders with the company, sales could decline and operating results may not meet expectations.

Forex Volatility: A substantial amount of Avantor’s revenues is derived from international operations. Avantor also anticipates that a significant portion of its sales will continue to come from international markets in the future. The revenues reported by Avantor with respect to its operations outside of the United States may be adversely affected by fluctuations in foreign currency exchange rates.

Estimate Trend

Avantor has been witnessing a negative estimate revision trend for 2025. Over the past 90 days, the Zacks Consensus Estimate for its earnings per share has moved south 7 cents to $1.05.

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $1.61 billion, which indicates a 4.1% decline from the year-ago reported number.

Stocks to Consider

Some better-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Cardinal Health CAH. At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s shares have rallied 30.1% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.

Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.

Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have gained 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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