Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Avantor (NYSE:AVTR) and the best and worst performers in the research tools & consumables industry.
The life sciences subsector specializing in research tools and consumables enables scientific discoveries across academia, biotechnology, and pharmaceuticals. These firms supply a wide range of essential laboratory products, ensuring a recurring revenue stream through repeat purchases and replenishment. Their business models benefit from strong customer loyalty, a diversified product portfolio, and exposure to both the research and clinical markets. However, challenges include high R&D investment to maintain technological leadership, pricing pressures from budget-conscious institutions, and vulnerability to fluctuations in research funding cycles. Looking ahead, this subsector stands to benefit from tailwinds such as growing demand for tools supporting emerging fields like synthetic biology and personalized medicine. There is also a rise in automation and AI-driven solutions in laboratories that could create new opportunities to sell tools and consumables. Nevertheless, headwinds exist. These companies tend to be at the mercy of supply chain disruptions and sensitivity to macroeconomic conditions that impact funding for research initiatives.
The 9 research tools & consumables stocks we track reported a mixed Q1. As a group, revenues beat analysts’ consensus estimates by 1.4% while next quarter’s revenue guidance was 1.1% above.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Weakest Q1: Avantor (NYSE:AVTR)
With roots dating back to 1904 and embedded in virtually every stage of scientific research and production, Avantor (NYSE:AVTR) provides mission-critical products, materials, and services to customers in biopharma, healthcare, education, and advanced technology industries.
Avantor reported revenues of $1.58 billion, down 5.9% year on year. This print fell short of analysts’ expectations by 1.6%. Overall, it was a softer quarter for the company with a miss of analysts’ organic revenue estimates and a slight miss of analysts’ EPS estimates.
"Our first quarter results demonstrate disciplined execution and a continued focus on cost management in a dynamic macro environment," said Michael Stubblefield, President and Chief Executive Officer.
Avantor Total Revenue
Avantor delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 21.6% since reporting and currently trades at $12.13.
Born from a real estate investment trust that transformed into a manufacturing powerhouse, Danaher (NYSE:DHR) is a global science and technology company that provides specialized equipment, software, and services for biotechnology, life sciences, and diagnostics.
Danaher reported revenues of $5.74 billion, flat year on year, outperforming analysts’ expectations by 2.7%. The business had a very strong quarter with a solid beat of analysts’ organic revenue and EPS estimates.
Danaher Total Revenue
The market seems content with the results as the stock is up 2.9% since reporting. It currently trades at $190.15.
With roots dating back to the precision balance innovations of Swiss engineer Erhard Mettler, Mettler-Toledo (NYSE:MTD) manufactures precision weighing instruments, analytical equipment, and product inspection systems used in laboratories, industrial settings, and food retail.
Mettler-Toledo reported revenues of $883.7 million, down 4.6% year on year, exceeding analysts’ expectations by 1%. Still, it was a slower quarter as it posted a miss of analysts’ full-year EPS guidance estimates.
Interestingly, the stock is up 2.5% since the results and currently trades at $1,081.
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE:WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Waters Corporation reported revenues of $661.7 million, up 3.9% year on year. This print topped analysts’ expectations by 1.2%. It was a satisfactory quarter as it also recorded a narrow beat of analysts’ organic revenue estimates.
The stock is down 1.3% since reporting and currently trades at $344.06.
With a critical role in ensuring the safety of millions of patients worldwide, Sotera Health (NASDAQGS:SHC) provides sterilization services, lab testing, and advisory services to ensure medical devices, pharmaceuticals, and food products are safe for use.
Sotera Health Company reported revenues of $254.5 million, up 2.6% year on year. This result surpassed analysts’ expectations by 3.1%. Overall, it was a strong quarter as it also produced an impressive beat of analysts’ organic revenue and EPS estimates.
The stock is up 14.3% since reporting and currently trades at $13.13.
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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