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AVTR Stock Flat Following the Close of Divestiture Deal With Audax
AVTRAvantor(AVTR) ZACKS·2024-10-21 18:30

Transaction Details - Avantor Inc (AVTR) closed the divestiture of its clinical services business to Audax Private Equity for approximately 650million[1]−Thedealincludeskitting,biorepository,andrelatedequipmentandancillaries,collectivelyknownasClinicalServices[3]−Thetransactionisexpectedtogenerateapproximately650 million [1] - The deal includes kitting, biorepository, and related equipment and ancillaries, collectively known as Clinical Services [3] - The transaction is expected to generate approximately 500 million in after-tax cash proceeds and reduce approximately 50millionincapitalizedleases[3]FinancialImpact−ThedivestiturestrengthensAVTR′sbalancesheetandreducesinterestexpenses[1]−Managementplanstousetheafter−taxproceedsfordebtpaydown[3]−ThedealalignswithAVTR′snewoperatingmodelandacceleratesitsbusinesstransformation[3]StockPerformance−AVTRsharesclosedflatat50 million in capitalized leases [3] Financial Impact - The divestiture strengthens AVTR's balance sheet and reduces interest expenses [1] - Management plans to use the after-tax proceeds for debt paydown [3] - The deal aligns with AVTR's new operating model and accelerates its business transformation [3] Stock Performance - AVTR shares closed flat at 24.73 following the announcement [2] - Year-to-date, AVTR shares have rallied 8.3%, outperforming the industry's decline of 2.5% [2] - The S&P 500 increased 22.9% during the same period [2] Industry Prospects - The global analytical laboratory service market is estimated to be 472.6millionin2024andprojectedtoreach472.6 million in 2024 and projected to reach 1,375 million by 2034, growing at a CAGR of 11.3% [4] - Factors driving the market include the growing popularity of point-of-care testing and the adoption of smart lab infrastructure with sensor networks [5] - The divestiture is expected to provide significant impetus to AVTR's lab and production businesses [5] Comparative Stock Analysis - AVTR currently carries a Zacks Rank 3 (Hold) [6] - Better-ranked stocks in the medical space include Boston Scientific (BSX), DaVita (DVA), and Masimo (MASI), each with a Zacks Rank 2 (Buy) [6] - Boston Scientific shares have gained 70.4% in the past year, with EPS estimates remaining constant at 2.40for2024and2.40 for 2024 and 2.71 for 2025 [6] - DaVita shares have surged 103.3% in the past year, with 2024 EPS estimates remaining constant at $9.99 [7] - Masimo shares have surged 80.4% in the past year, with 2024 EPS estimates rising 0.3% in the past 30 days [7]