Avantor Stock Declines Despite Q1 Earnings In-Line, Revenues Down Y/Y

Avantor, Inc. AVTR reported first-quarter 2025 adjusted earnings per share (EPS) of 23 cents, up 4.5% from the year-ago quarter. The bottom line remains in line with the Zacks Consensus Estimate. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

GAAP EPS for the quarter was 9 cents, flat year over year.

AVTR Revenue Details

Revenues grossed $1.58 billion in the reported quarter, down 5.9% year over year. The metric missed the Zacks Consensus Estimate by 1.7%.

Avantor's foreign currency translation and Clinical Services divestiture had an unfavorable impact in the reported quarter, resulting in an organic sales decline of 2.2%.

Shares of this company plunged 16.6% till Friday’s trading.

Avantor’s Segmental Analysis

The Laboratory Solutions segment’s net sales were $1.07 billion, reflecting a reported decrease of 8% year over year. Organic sales decreased 2.9% year over year in the reported quarter. This figure compares to our segmental projection of $1.05 billion.

Per management, Avantor faced significant headwinds in its Lab Solutions segment during the first quarter of 2025, primarily caused by three key challenges. First, funding cuts in the U.S. higher education and government sectors, which account for approximately 5% of the company's total revenues, led to reduced capital spending and lower lab activity. This negatively impacted demand for equipment and consumables. Second, funding for bench-stage biotech companies plummeted by around 40%, further weakening demand from this critical customer segment. Third, heightened competitive intensity in the market resulted in volume losses at certain accounts, as customers shifted spending to alternative suppliers.

Bioscience Production’s net sales were $516.4 million, reflecting a reported decrease of 1.2%, whereas organic sales decreased 0.3% year over year. This figure compares to our segmental projection of $557 million.

Per management, Bioprocessing (representing about two-thirds of the segment) delivered low single-digit growth in the first quarter of 2025. This performance was supported by solid demand for process ingredients and excipients, as well as double-digit growth in single-use offerings like Masterflex. However, these gains were partially offset by softer demand for controlled environment consumables—critical for maintaining clean room integrity—as customers optimized usage in response to macroeconomic pressures. Despite this near-term weakness, the segment's order book remained robust, reflecting sustained momentum in bioprocessing and reinforcing confidence in a gradual recovery moving forward.

AVTR’s Margin Analysis

In the quarter under review, Avantor’s gross profit declined 6.2% year over year to $534.9 million. The gross margin contracted 14 basis points (bps) to 33.8%. We had projected 34.3% of gross margin for the first quarter.

Selling, general and administrative expenses decreased 8.7% to $387.5 million year over year.

Adjusted operating profit totaled $242.8 million, down 6% from the prior-year quarter’s level. The adjusted operating margin in the quarter remained flat at 15.4%.

Avantor, Inc. Price, Consensus and EPS Surprise

Avantor, Inc. price-consensus-eps-surprise-chart | Avantor, Inc. Quote

Avantor’s Financial Position

Avantor exited the first quarter of 2025 with cash and cash equivalents of $315.7 million compared with $261.9 million at 2024-end. Total debt at the end of the first quarter of 2025 was $4.11 billion compared with $4.06 billion at 2024-end.

Net cash provided by operating activities at the end of first quarter of 2025 was $109.3 million compared with $141.6 million a year ago.

AVTR’s Guidance

Avantor has updated its outlook for 2025.

The company projects its organic revenues to witness growth of negative 1% to positive 1% for the full year.

Management expects negative low-single-digit to flat organic growth in the Laboratory Solutions segment and mid-single-digit organic growth in Bioscience Production. Management also now expects bioprocessing to grow mid-single digits in 2025.

The company now expects its adjusted EPS to lie in the range of $1.02-$1.10, up 10% from the comparable 2024 period. The Zacks Consensus Estimate is pegged at $1.05.

Our Take

Avantor exited the first quarter of 2025 with mixed results. 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.

Avantor made significant strides in expanding its portfolio and enhancing customer solutions in the first quarter of 2025. A key highlight was the accelerated commercialization of the J.T. Baker Viral Inactivation Solution, a critical product for downstream viral clearance in monoclonal antibody production, now specified into multiple platforms with more in late-stage evaluation.

The company also strengthened its distribution network through new agreements with Abcam (adding 100,000+ antibody and reagent SKUs globally), Fujifilm Irvine Scientific (expanding cell culture media distribution in the Americas), and Merck KGaA (adding 1,900+ lab filtration SKUs in Western Europe).

On the digital front, Avantor rolled out its AI-enabled e-commerce platform to streamline procurement and improve customer experience. Additionally, the company continued advancing its Masterflex fluid handling systems, reinforcing its leadership in single-use bioprocessing. These innovations, paired with ongoing automation investments in distribution centers, underscore Avantor’s focus on high-value, differentiated offerings to drive long-term growth. These look promising for the stock.

However, per management, continued spending caution is expected from education and government customers, particularly in the U.S., driven by funding concerns. Management also noted that the broader market is still assessing the potential impacts of tariffs. The company has been actively working to minimize the effects of current tariffs on its performance. As of now, management estimates that about 2% of COGS is exposed to China-related tariffs, representing the most significant tariff risk, while exposure to tariffs from the rest of the world remains relatively modest.

Avantor’s Zacks Rank and Stocks to Consider

AVTR currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the same medical industry are Fresenius Medical Care FMS, Masimo MASI and Glaukos GKOS.

Fresenius Medical, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 28.9% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMS’ earnings beat estimates in three of the trailing four quarters and met in one, delivering an average surprise of 15.67%. The company is expected to release first-quarter results next month.

FMS’ shares have gained 6% so far this year.

Masimo, sporting a Zacks Rank of 1 at present, has an estimated growth rate of 20% for 2025.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 14.41%. The company is expected to release first-quarter results in May.

MASI’s shares have lost 8% so far this year.

Glaukos, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 48.9% for 2025. It delivered a trailing four-quarter average earnings surprise of 8.11%. The company’s earnings beat estimates in two of the trailing four quarters, met in one and missed in the other, delivering an average surprise of 8.11%. The company is expected to release first-quarter results on April 30.

GKOS’ shares have plunged 40.1% so far this year.

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

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