Avantor missed Q2 revenue estimates and cut its full-year outlook, citing slower bioprocessing demand and a weak Europe. The materials segment grew 3.5% on chip demand.
Alpha Score of 44 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Avantor missed second-quarter revenue estimates and lowered its full-year 2026 guidance, blaming a slower-than-expected bioprocessing recovery and a weak European lab market.
The lab supplies company reported adjusted earnings of $0.26 a share, a penny above consensus. Revenue of $1.67 billion fell about $20 million short of the $1.69 billion analysts expected. Organic revenue declined 1.7% year over year, worse than the 0.5% drop the company had forecast three months ago.
CEO Emmanuel Ligner told analysts the bioprocessing recovery is "taking longer than anticipated." Laboratory Solutions revenue, Avantor's biggest segment, fell 2.9% organically, dragged by a European market that showed no improvement from the first quarter. The biopharma end market, roughly half of sales, slipped 1.4% organically.
Avantor now expects 2026 full-year revenue of $6.74 billion to $6.82 billion, down from a prior range of $6.86 billion to $7.02 billion. The midpoint implies organic revenue growth near zero, compared with the earlier forecast for 1% to 3% growth. Adjusted operating margin guidance was cut to 17.5% to 17.9%, from 18.0% to 18.4%.
The shares fell 7.1% in early trading Tuesday.
"The bioprocessing end market is not improving at the pace we expected," Ligner said. Customers are drawing down inventories more slowly than Avantor had modeled. Ligner said the company saw "no signs of an inflection" in the second half. The third-quarter outlook calls for organic revenue down 2% to 4%, which would be the worst quarter of the year.
Adjusted gross margin of 33.8% improved 10 basis points from a year ago, helped by cost cuts and mix. Free cash flow of $133 million in the quarter was down from $153 million a year earlier, partly due to higher inventory. The company ended the quarter with net leverage of 3.0 times, unchanged from the previous quarter.
Interim CFO Steven Eck said Avantor is "actively managing" working capital and expects free cash flow to improve in the second half as inventory normalizes. He maintained the full-year free cash flow outlook of $650 million to $700 million, though achieving the top end now looks "more challenging," he said.
Several analysts pressed Ligner on when bioprocessing demand might turn. He declined to give a specific timeline, saying the company was "not in a position to call the bottom."
One area of growth: Avantor's proprietary materials business, which includes high-purity chemicals for semiconductor manufacturing, grew organic sales 3.5% in the quarter. Demand from chipmakers in Asia led the increase.
Avantor ended the quarter with net leverage of 3.0 times. The shares traded at $19.44, down 7.1% on the day.
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