What Happened?
Shares of life sciences company Avantor (NYSE: AVTR) jumped 4.9% in the afternoon session after sentiment towards the stock improved following a series of positive developments, including an analyst price target increase, a new board appointment, and the influence of an activist investor.
Barclays raised its price target on the company's stock to $15.00 from $13.00 and maintained its "Overweight" rating. Separately, reports indicated an activist investor was pushing for significant changes or even a potential sale of the company. Avantor also announced it appointed Gregory T. Lucier to its Board of Directors, bringing significant experience from the healthcare industry.
After the initial pop the shares cooled down to $14.32, up 4% from previous close.
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What Is The Market Telling Us
Avantor’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 5.5% on the news that reports revealed a potential drug-pricing agreement between the White House and the pharmaceutical industry. The Trump administration is advancing its “Most Favored Nation” initiative, which aims to lower prescription drug costs for Americans. This policy would tie the prices of medications in the U.S. to the lowest costs paid by other wealthy nations. As part of this push, Pfizer has reportedly entered into an agreement to voluntarily sell its medications through Medicaid at these reduced prices. The move comes as the administration intensifies pressure on drugmakers to make prices more affordable. While pricing controls can often be a headwind, the market's positive reaction suggests that investors may see this voluntary agreement as a way to resolve regulatory uncertainty, providing a clearer path forward for the industry.
Avantor is down 32.5% since the beginning of the year, and at $14.32 per share, it is trading 43.4% below its 52-week high of $25.31 from October 2024. Investors who bought $1,000 worth of Avantor’s shares 5 years ago would now be looking at an investment worth $610.14.
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