Avantor Inc. (NYSE:AVTR) stock is trading lower on Friday after the company reported worse-than-expected second-quarter 2025 adjusted EPS.
The company reported adjusted EPS of 24 cents, marginally below the consensus of 25 cents.
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The life science tools company reported sales of $1.68 billion, almost in line with the consensus of $1.675 billion.
Sales fell 1% compared to the second quarter of 2024. Foreign currency translation had a positive impact of 2% and M&A had a negative impact of 3%, resulting in flat sales on an organic basis.
Laboratory Solutions sales were $1.12 billion, a reported decrease of 3%. Sales decreased by 1% organically.
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Bioscience Production sales were $561.3 million, a reported decrease of 3%, and a 2% sales increase on an organic basis.
The company said the bioprocessing performance fell short of expectations in its earnings call. Avantor added that while demand for the core monoclonal antibody platform remains strong, however, quarterly throughput was impacted by planned maintenance efforts at one of the manufacturing facilities.
Also, a few of the company’s large customers faced major unexpected headwinds during the quarter, which slowed the recovery rate in controlled environment consumables and impacted demand in other elements of our offering.
Net income decreased to $64.7 million from $92.9 million a year ago, and adjusted net income was $161.2 million compared to $168 million. Net income margin was 3.8%.
Adjusted EBITDA was $279.8 million, down from $305.6 million, and the margin was 16.6%.
Adjusted operating income fell from $277.2 million to $252.2 million, with a margin of 15.0%.
During its first quarter earnings, Avantor announced significant actions across the business to accelerate growth and enhance its cost structure, increasing the cost transformation target to $400 million in gross run-rate savings by the end of 2027.
In July, Avantor appointed Emmanuel Ligner as president and CEO, effective Aug. 18. Ligner succeeds Michael Stubblefield, who will step down.
The company executed a five-year extension of the contract with BIO Business Solutions.
During an earnings conference call on Friday, Stubblefield said, “Collectively, BIO is our largest customer, and this extension ensures we are uniquely positioned to benefit when funding levels return to historical norms across the biotech industry. These are significant wins, particularly as competitive intensity remains high across our industry.”
The company’s 2025 outlook contemplates pressured margin rate assumptions through the balance of the year.
William Blair writes that Avantor stock trades at about 10.8 times the 2025 EBITDA estimate compared to peers at 15.4 times and its 15.9-times average as a public company.
“While we acknowledge that Avantor has a possible path to outperformance as end-markets continue to return and more of the now $400 million in targeted cost savings take hold, we think the company's below-peer growth and margin profile make the discount to peers warranted at this time.”
Analyst Matt Larew maintains a Market Perform rating for the stock.
AVTR Price Action: Avantor stock is down 15.77% at $11.32 at publication on Friday.
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