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Jefferies, another Wall Street firm, also weighed in on Avantor’s Investor Day, highlighting the company’s strategic and financial shifts.
As noted by Jefferies, Avantor is moving away from its traditional geographic layout to two Strategic Business Units (SBUs): Lab Solutions and Bioscience Production. “It’s not just a financial exercise of moving things from one bucket to another. The new simplified segments (now more similar to how other Tools peers are organized) will enable more accountability & transparency, which in turn should boost execution, and perhaps, growth,” mentioned Jefferies.
Lab Solutions, representing 67% of Avantor’s revenue, will now be operated under one roof, compared to being split across different parts of the company prior. The Bioscience Production segment, making up 33% of revenues, provides high-purity materials and solutions for bioprocess, healthcare (medical-grade silicone) and advanced tech markets.
A significant announcement was Avantor’s plan to achieve $300 million in gross run-rate savings by 2026. These savings will primarily come from RIF/organization streamlining (~35% of savings), footprint (complex, underutilized network today / ~20% of savings), lower cost-to-serve (shared service, indirect spend), and procurement savings where minor wins can drive major improvement.
Furthermore, Avantor reiterated its long-term core growth (4-6%) and margin expansion (50-100 basis points per year) targets. This reaffirmation underscores the company’s confidence in its new strategic direction.
“New CFO made a positive impression as he seeks to restore investor confidence. With AVTR lapping easy comps & order patterns starting to normalize, analysts remain constructive on the stock,” commented Jefferies.
While formal guidance for 2024 was not provided, Avantor’s management is preparing for a scenario of low to no growth, consistent with projections from other industry players.
