Avantor, Inc. (AVTR) released its third-quarter 2023 financial results, with adjusted earnings per share (EPS) of 25 cents, in line with the Zacks Consensus Estimate. However, the earnings decreased by 26.5% compared to the same quarter last year. The company reported a GAAP loss per share of 16 cents, showing a decline of 36% year over year.
Revenue Details
The reported quarter witnessed Avantor generating $1.72 billion in revenues, which exceeded the Zacks Consensus Estimate by 1.2%. However, this reflected a 7.3% decline compared to the previous year. The company experienced a 2.3% favorable impact due to foreign currency translation, resulting in organic sales declining by 9.6% and core organic sales (excluding COVID-19 headwinds) declining by 7.9%.
Segmental Analysis
The financial results were reported in three geographic segments: the Americas, Europe, and AMEA (Asia, Middle-East, and Africa). The Americas segment’s net sales were $1.02 billion, reflecting a reported decline of 9.3% year over year. Europe’s net sales were $579.8 million, indicating a reported decrease of 2.6%.
The AMEA arm’s net sales declined by 12.3% to $121.2 million. The core organic sales in this segment decreased by 5.4% due to declines in lab consumables and single-use solutions and formulated solutions for Avantor’s semiconductor customers.
Margin Analysis
In terms of margins, Avantor experienced a contraction in gross profit by 11.1%, resulting in a gross margin of 33.6%. Selling, general, and administrative expenses decreased by 1.7% to $368.4 million year over year. The operating profit totaled $210.2 million, down 23.8% from the previous year’s level.
Financial Position
As of the end of the third quarter in 2023, Avantor reported cash and cash equivalents of $236.9 million, and its total debt was $5.63 billion. Cumulative net cash flow from operating activities at the end of the quarter was $618.4 million.
Guidance
Avantor revised its outlook for 2023, expecting organic revenue declines of 8.5-7.5% and core organic revenue declines of 6-5%. The company anticipates adjusted EPS to fall within the range of $1.02-$1.06 for the full year.
Our Take
Avantor faced challenges in the third quarter of 2023 with a decline in both top-line and bottom-line performances. The continued conservative approach to customer spending in the research environment negatively impacted activity levels in research labs. However, the company’s in-line adjusted EPS and better-than-expected revenues brought positivity.
Despite the challenges, Avantor has been witnessing double-digit growth in critical product lines targeting cell and gene therapy workflows. The company’s focus on innovation and the addition of proprietary products show promise for future success.
Zacks Rank and Other Stocks to Consider
Avantor currently holds a Zacks Rank #4 (Sell). Alternatively, investors may consider stocks like Abbott Laboratories (ABT), Boston Scientific Corporation (BSX), and West Pharmaceutical Services, Inc. (WST), which have shown positive quarterly results in the broader medical space.
Abbott reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate. Boston Scientific reported third-quarter 2023 adjusted EPS of 50 cents, surpassing the Zacks Consensus Estimate. West Pharmaceutical reported third-quarter 2023 adjusted EPS of $2.16, beating the Zacks Consensus Estimate by 16.1%.
These stocks have consistently outperformed estimates and have a positive long-term growth outlook.
For the complete list of stocks and their detailed analysis, you can refer to the Zacks Investment Research website.
Note: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
