Reasons to Retain Avanos Medical Stock in Your Portfolio Now

Avanos Medical, Inc. AVNS is well-poised for growth in the coming quarters, courtesy of its impressive product line. The optimism, led by a decent fiscal second-quarter 2025 performance and continued robust product performance, is expected to contribute further. However, tariff risks and foreign exchange volatility persist.

In the year-to-date period, this Zacks Rank #3 (Hold) stock plunged 22.4% compared with an 8.2% decline of the industry. The S&P 500 Composite increased 11% in the same time frame.

The renowned medical device solutions provider has a market capitalization of $576.8 million. Avanos’ earnings yield of 7.4% compares favorably against the industry’s negative yield.

Factors Favoring AVNS’ Growth

Robust Product Performance in Q2: In the fiscal second quarter of 2025, Avanos reported solid performance across both core segments. The SNS segment delivered 5% organic growth, outpacing the market, supported by strong demand in long-term and short-term enteral feeding. Growth was further fueled by the U.S. rollout of CORTRAK and the launch of CORGRIP, while neonatal solutions rose more than 12% on ENFit adoption. Despite tariffs and temporary cost absorption headwinds, SNS maintained nearly 18% operating profit. Management reaffirmed mid-single-digit organic growth guidance for 2025.

The Pain Management and Recovery segment posted a mixed but encouraging quarter. Radiofrequency ablation grew nearly 14% on strong generator sales that drive recurring demand. International momentum for the COOLIEF platform also strengthened, supported by reimbursement wins in the UK and Japan. Management emphasized Avanos’s growing reputation as a focused RF ablation company.

Ongoing Strategic Transformation Process: Avanos launched its three-year Transformation Process in January 2023 to streamline operations, strengthen profitability and sharpen its strategic focus. By the fiscal second quarter of 2025, the company had advanced this plan with key milestones, including the divestiture of its hyaluronic acid product line and the earlier sale of its Respiratory Health business, allowing greater focus on Specialty Nutrition Systems and Pain Management and Recovery.

The acquisition of Diros Technology in 2023 expanded the radiofrequency ablation portfolio and reinforced Avanos’s leadership in non-opioid pain solutions. Looking ahead, management continues to evaluate strategic acquisitions in areas such as advanced feeding tubes, AI-enabled nutrition systems and enteral formula suppliers to deepen capabilities in high-margin therapeutic niches and drive innovation-led growth.

Decent Q2 Results: Avanos ended fiscal second-quarter 2025 with steady top-line growth, supported by strength in the SNS segment and solid RFA product sales within PM&R. While surgical pain and recovery, HA injections and intravenous infusion products remained soft, management continues to focus on execution to improve performance across these areas.

Margins were pressured by tariff-related costs, with over $8 million incurred in the quarter, but Avanos is actively mitigating the impact. The company is pursuing cost containment, pricing actions, and tariff exemptions while accelerating plans to exit China-sourced NeoMed products by 2026. These initiatives, along with ongoing commercial execution, are expected to strengthen profitability over time.

Factors That May Offset the Gains for AVNS

Tariff Risks and Supply-Chain Restructuring: Avanos is under pressure from escalating U.S.-China trade tensions, with $8 million in tariffs incurred in the fiscal second quarter of 2025 and up to $15 million in added costs expected for the year from expanded coverage on China- and Mexico-sourced products. Management is pursuing relief through USMCA, exemptions, and cost pass-throughs, while shifting syringe manufacturing out of China by early 2026. However, this transition carries near-term risks of higher expenses, inefficiencies, and potential disruptions, and the extended timeline, combined with limited control over trade policy, creates continued margin and earnings headwinds.

FX Volatility and Revenue Headwinds: Avanos faces FX headwinds from a stronger U.S. dollar, expected to reduce reported 2025 revenues by about 100 basis points. Despite some easing in the fiscal second quarter, the risk remains significant given global uncertainty. Further dollar appreciation could pressure margins and competitiveness as foreign earnings are translated at lower rates and overseas customers face higher costs. Management does not speculate on FX but plans to mitigate the impact through hedging, pricing strategies, and operational adjustments.

Estimate Trend

Avanos is witnessing a stable estimate revision trend for 2025. In the past 60 days, the Zacks Consensus Estimate for earnings has remained stable at 92 cents per share.

The Zacks Consensus Estimate for the company’s third-quarter 2025 revenues is pegged at $166.4 million, indicating a 2.4% decline from the year-ago quarter’s reported number. Earnings estimate of 19 cents per share implies a 47.2% decline year over year.

Stocks to Consider

Some better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. MEDP, West Pharmaceutical Services, Inc. WST and Boston Scientific Corporation BSX.

Medpace Holdings, sporting a Zacks Rank of 1 (Strong Buy), reported second-quarter 2025 EPS of $3.10, beating the Zacks Consensus Estimate by 3.3%. Revenues of $603.3 million outpaced the consensus mark by 11.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Medpace Holdings has a long-term estimated growth rate of 11.4%. MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.9%.

West Pharmaceutical reported second-quarter 2025 adjusted EPS of $1.84, beating the Zacks Consensus Estimate by 21.9%. Revenues of $766.5 million surpassed the Zacks Consensus Estimate by 5.4%. It currently flaunts a Zacks Rank #1.

West Pharmaceutical has a long-term estimated growth rate of 8.5%. WST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.8%.

Boston Scientific reported second-quarter 2025 adjusted EPS of 75 cents, beating the Zacks Consensus Estimate by 4.2%. Revenues of $5.06 billion surpassed the Zacks Consensus Estimate by 3.5%. It currently carries a Zacks Rank #2 (Buy).

Boston Scientific has a long-term estimated growth rate of 14%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.1%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research