By Senad Karaahmetovic
Citi analysts upgraded shares of Avantor (NYSE:AVTR) to Buy from Neutral with a $28 per share price target.
The upgrade comes as Avantor shares trade over 30% lower since the end of July. The analysts described this underperformance as “significant,” and see disconnected valuation.
“We believe current valuation appropriately accounts for the M&A revenue shortfall and downside risk to core numbers. Further, we see a potential clearing event for AVTR stock if management formally sets a more appropriate floor for FY23 organic revenue growth guidance on the earnings call on the lower end of the company’s long-term +4-6% organic growth target range,” they said in a client note.
On the other hand, the analysts cut the rating on Sotera Health Company (NASDAQ:SHC) to Neutral from Buy with the price target going to $9 from $25. The upgrade move comes on the back of a recent jury verdict in the Kamuda trial in Illinois that went against SHC with the company ordered to pay about $100 million for damages associated with decades of toxic air pollution near its former Willowbrook sterilization facility.
“The loss of the Kamuda trial appeal and subsequent trial losses would have a materially negative impact on Sotera’s balance sheet and liquidity position moving forward, in our view. Given the increased risk we move to the sidelines,” they further explained in a note.
SHC shares are down over 8% today while Avantor stock is up more than 1%.