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Avantor (AVTR) to Report Q3 Earnings: What's in the Offing?

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Avantor, Inc. AVTR is slated to release third-quarter 2021 results on Oct 28, after market close.

In the last-reported quarter, the company’s earnings of 35 cents surpassed the Zacks Consensus Estimate by 16.7%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, the average beat being 16.88%.

Let's discuss factors that are likely to have impacted Avantor’s performance in the quarter.

Factors at Play

During the second-quarter earnings call in July, Avantor had confirmed that the company has been gaining from sales of its COVID-19 products, which include raw materials and single-use solutions for vaccine production. Given the continued pandemic-led impacts, the momentum in the sale of COVID-19 products is likely to have continued in the third-quarter as well, thereby contributing to the overall top line.

The company completed the buyout of Ritter GmbH and its affiliates in June. Although this did not have any material impact on its second-quarter results, the third-quarter revenues are likely to have been boosted. Per the second-quarter earnings call, Avantor launched Ritter's products under the J.T. Baker brand name through its differentiated customer channel, which is likely to have been a revenue contributor in the to-be-reported quarter.

Avantor, Inc. Price and EPS Surprise

Avantor, Inc. Price and EPS Surprise
Avantor, Inc. Price and EPS Surprise

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

Avantor had also completed numerous capacity expansions in the second quarter, including a single-use expansion of its facility in Devens, MA, the start-up of a new single-use logistics facility in North America as well as several expansion projects at its raw materials manufacturing locations in Aurora, OH, and St. Louis, MO. These developments are likely to have a positive impact on the company’s revenues in the third quarter.

Over the past few months, the momentum in Avantor’s base business has been driven by strong fundamentals across all of its end markets. The company’s strength in biopharma and other end markets (including sequential improvement and advanced technologies and applied materials) is likely to have continued in the third quarter as well.

Avantor’s healthcare business has also been gaining over the past few months on the back of robust materials and consumable sales to hospital and clinical reference lab customers, as well as growth from the company’s proprietary materials offering in the medical device space. Further, the company’s geographical performance has also been strong over the past few months on the back of robust product sales. These factors are likely to have continued to aid Avantor, thereby boosting its third-quarter revenues.

Preliminary Q3 Results

Avantor, in its third-quarter preliminary results released this month, expects total revenues to be approximately $1.83 billion, implying a projected 14.3% improvement on a reported basis and organic growth of 10.2% year over year.

Per the company, the robust revenue projections are based on its ongoing business strength.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter revenues of $1.83 billion suggests an uptick of 14.1% from the prior-year quarter’s figure.

The consensus mark for third-quarter earnings of 32 cents per share indicates a 33.3% improvement from the year-ago quarter's reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has higher chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Avantor has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

Insulet Corporation PODD has an Earnings ESP of +15.79% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DexCom, Inc. DXCM has an Earnings ESP of +5.46% and a Zacks Rank of 2, at present.

Laboratory Corporation of America Holdings LH or LabCorp has an Earnings ESP of +27.39% and is a Zacks #2 Ranked stock.

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Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report

DexCom, Inc. (DXCM) : Free Stock Analysis Report

Insulet Corporation (PODD) : Free Stock Analysis Report

Avantor, Inc. (AVTR) : Free Stock Analysis Report

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