AVTR - Avantor raised to Buy at Citi on valuation disconnect

• Citi upgraded the life sciences company Avantor, Inc. ( NYSE: AVTR ) to Buy from Hold on Wednesday, arguing that a moderate disconnect between its valuation and fundamentals indicates an attractive entry point to the stock at the current levels.
• The analyst Patrick Donnelly and the team point out that the AVTR, with a YTD decline of 51%, has underperformed Citi’s Tools Composite Index comprised of companies such as Agilent ( A ) and Danaher ( DHR ).
• However, in terms of EV/EBITDA, AVTR trades at a discount to the peer group even as the company outperforms the rivals in terms of consensus projections for FY23 revenue growth and adj. EBITDA margin expansion, the team, pointed out.
• Citi also argues that the recent selloff in AVTR shares adequately accounts for the recent downward revisions to guidance and risk to financials triggered by concerns such as softer than expected M&A contribution, the impact of the China lockdown, and weak industrial demand in Europe.
• In September, AVTR drew downgrades on Wall Street after the management lowered the revenue guidance.

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