Our $14 price target applies a 50% weight to an EV/EBITDA multiple of 11x our Q5-Q8 EBITDA estimate of $1.2bn and a 50% weight to a 13.2x P/E multiple to our Q5-Q8 EPS estimate of $1.09. We believe AVTR deserves a slight discount to the peer group given its higher leverage levels, lower margin profile, and less attractive business mix.

Key risks to the downside for our price target include: 1) inflection of bioprocessing activity pushed out longer than anticipated; 2) destocking headwinds last longer than expected; 3) lesser cost action benefits limiting margin expansion; and 4) increased competition weighing on the company’s ability to drive price increases and maintain market share.

Key risks to the upside for our price target include: 1) bioprocessing activity does accelerate into FY25, providing upside to numbers; 2) cost actions provide a greater tailwind to margins than initially expected; and 3) destocking headwinds are eliminated going into FY25.