AZTA — Azenta, Inc. · 2026-09-09 · Verdict: WATCH · Conviction 2
Price $30.82 (screen row, 2026-09-09) · Mkt cap $1.35B · EV $786M · EV/normalised EBIT 107x · LTM FCF yield 0.7% · Net cash $564M · ADV $25.5M Sources: 10-K filed 2025-12-04 (FY to 2025-09-30; Items 1, 1A, 7), 10-Q filed 2026-08-06 (quarter to 2026-06-30), DEF 14A 2025-12-18, 8-Ks 2026-05-05, 07-08, 08-04, 08-11, 08-24, 09-04, Form 4s (12m). No transcript or prepared remarks were filed, so nothing here is quoted from the call.
Desk stats - Revenue trend. FY2025 revenue $593.8M, up 3.6% (10-K Item 7). Q3 FY26 revenue $161.2M, up 12.0%, but only 9% organic after 1 point of FX and 3 points from the UK Biocentre acquisition; nine-month organic growth is 2% ($442M vs $435M) and Q4 organic is guided down low single digits (8-K 2026-08-04). - Normalised after-tax operating profit. LTM to 30 June 2026 GAAP operating loss $175.3M. Add back goodwill impairment $149.1M (10-Q; $112.4M Multiomics, $36.6M SMS), intangible amortisation $22.8M, transformation costs $2.5M, restructuring $3.5M, merger and acquisition costs $4.5M, purchase accounting $0.2M. Normalised operating income $7.35M (GAAP negative $175.3M), taxed at 25% = $5.5M. That matches the company's own adjusted operating income and is struck after stock compensation. - EV / normalised after-tax profit: ~143x. EV = $1,350M cap less $528.5M of cash, restricted cash and marketable securities at 30 June (10-Q) less the $35.4M vendor loan repaid 2026-09-03 (8-K 2026-09-04), plus zero debt ("As of June 30, 2026, we had no outstanding debt on our balance sheet," 10-Q) = $786M. - Leverage. Net cash $564M, 42% of market value, no borrowings or converts, so net debt / normalised EBITDA is negative. - Is the growth sustainable? Partly bought and not cash-backed: nine-month organic growth is 2%, Q4 organic is guided down, and nine-month free cash flow fell to $15.6M from $44.0M. - What the screen got wrong. Four things. (1) The $204.4M "impairment" added back to continuing-operations EBIT is $111.3M of goodwill plus $93.1M of long-lived assets written off inside discontinued operations on B Medical Systems; FY2025 continuing operations recorded impairment of zero (10-K Item 7). Normalised EBIT should read $15.6M, not $177.6M. (2) Cash was read as $189.7M, ignoring $332.2M of marketable securities. (3) The "debt untagged" warning resolves in the company's favour: there is none. (4) Reading CY2025 frames, the screen missed the $149.1M goodwill impairment actually taken in March 2026.
1. What the business does
Azenta is the life-sciences half of the old Brooks Automation, which sold its semiconductor business to Thomas H. Lee for $2.9 billion in February 2022 and renamed itself (10-K Item 1). Sample Management Solutions ($324.6M FY25) stores and moves biological samples: outsourced repository services, automated ultra-cold stores, cryogenic systems, coded tubes, consumables. Multiomics ($269.2M FY25) is the GENEWIZ genomics lab business, run from 14 laboratories including three in China. About 14,000 customers, 39% of revenue outside the US. B Medical Systems was sold on 2026-07-01 for a fixed $63M (8-K 2026-07-08).
2. Why it is mispriced — the edge case
The screen's cheapness is a data artefact, dismantled in section 3. The genuine edge case is governance. Politan Capital owns 10.0% and Quentin Koffey has been a director since November 2024 under a Cooperation Agreement that created a Value Creation Committee and removed three incumbents; that standstill expired 2025-10-23 (DEF 14A). On 2026-08-22 John Marotta resigned as CEO and from the board after 23 months, replaced on an interim basis by Martin Madaus, a Carlyle senior operating executive who sold Millipore to Merck KGaA for $7.2 billion and chairs Repligen (8-K 2026-08-24). A 10% activist off standstill, $564M of net cash and $200M of unused buyback is a real setup. What it is not is a forced seller: the stock is up 33% in six months and sits 25% below its 52-week high on $25.5M of daily volume.
3. GAAP to normalised, and whether the charges recur
FY2025: GAAP operating loss $26.8M; add amortisation $24.4M, transformation and rebranding $10.4M, restructuring $5.2M, M&A and share-repurchase costs $2.4M; adjusted operating income $15.6M, a 2.6% margin (10-K Item 7). Nine months FY26: GAAP operating loss $177.2M; add impairment $149.1M, amortisation $16.7M, transformation $1.9M, restructuring $3.1M, M&A $4.4M, purchase accounting $0.2M; adjusted operating loss $1.8M against positive $6.5M a year earlier (10-Q). The direction is backwards.
The charges are not one-time. FY2024 carried a $4.7M intangible impairment; FY2025 carried $204.4M in discontinued operations; FY2026 carried $149.1M in continuing operations. Three years, three write-downs. The 10-Q attributes the March test to revised forecasts and "a sustained decline in the Company's stock price," and warns results "may expose us to material impairment charges in the future." About $400M of goodwill remains.
Underneath, adjusted gross margin fell to 46.2% in Q3 from 47.6% on weak fixed-cost absorption and "rework cost incurred on Automated Stores projects." SMS adjusted operating income fell to $4.9M from $10.7M, down 823bp of margin, which is the quality problem; Multiomics improved to a $0.3M loss from $4.0M. Depreciation of roughly $54M a year runs at twice capex.
4. Balance sheet and capital allocation
No debt. The December 2025 authorisation is $250M through 2028; $50M bought 2.3 million shares in the March quarter and nothing since, leaving $200M, about 15% of the cap. Share count is down 4.4% year over year. Twelve months of Form 4s show two open-market buys and no sales: William Cornog, who chairs the Value Creation Committee, bought 10,000 shares at $16.38 on 2026-05-18, and the general counsel 335 shares at $24.17 on 2026-07-31. Cornog's buy is 47% below today's price, which is the point: the dislocation was in May and has been paid for.
5. Management: said versus did
The long-range plan ran to 2028. On 2026-05-05 the company cut FY26 guidance and pushed the plan to 2029, calling it "a disciplined and prudent approach to execution" while the framework stayed "intact." On 2026-08-04 Marotta said "our turnaround continues"; eighteen days later he resigned. FY26 free cash flow is still guided to improve 10-15%, roughly $42-44M against FY25's $38.3M, but nine-month free cash flow is $15.6M ($35.8M operating cash less $20.2M capex), so Q4 must produce about $27M against negative $5.7M a year ago. That is the least credible number in the guide.
6. Valuation
Bear (30%): margin recovery stalls, adjusted EBITDA holds near $60M, 8x gives $480M enterprise plus about $500M of net cash, $23. Base (50%): FY29 revenue $672M (3% CAGR) at a 14% adjusted EBITDA margin is $94M, 11x is $1,034M, plus $564M of cash on a share count cut to about 39 million by $150M of buybacks, discounted three years at 10%, $31. Bull (20%): plan delivered or company sold, FY29 revenue $720M at an 18% margin, 13x, $58. Probability-weighted $34, about 10% above price. Reverse DCF: unlevered free cash flow of roughly $31M (NOPAT $4M plus $54M depreciation less $27M capex) against $786M of enterprise value implies about 5% perpetual growth at a 9% discount rate, against organic revenue guided flat-to-up-1% this year and down next quarter.
7. Catalysts and timeline
Q4 and FY2026 results in early December, carrying the free-cash-flow test and the first FY2027 guide. A permanent CEO. The 2026 annual meeting nomination window with Politan no longer under standstill. Any restart of the buyback at scale.
8. Kill criteria
- FY2026 free cash flow below $35M at the December print, meaning the Q4 cash swing did not happen.
- Any further goodwill or intangible impairment in FY2027 against the roughly $400M remaining.
- Consolidated adjusted operating margin negative for two more consecutive quarters after the +2.9% printed in Q3.
- Politan filing a 13D/A below 5%, or Koffey leaving the board.
9. Verdict and summary
WATCH, conviction 2. Azenta is not the 8.7x compounder the screen produced: that number came from adding a $204 million write-down of a discontinued business back to continuing-operations profit, and the company's own adjusted operating income was $15.6 million in FY2025 and negative $1.8 million over the first nine months of FY2026, so the $786 million enterprise value is about 143x normalised after-tax operating profit and roughly 13x guided adjusted EBITDA. The screen also missed $332 million of marketable securities and the fresh $149 million goodwill impairment taken in March 2026, the third write-down in three years. What keeps it on the list is the setup rather than the price: no debt, $564 million of net cash worth 42% of the market value, $200 million of untouched buyback, a 10% activist whose standstill expired last October, and an interim CEO who once sold Millipore for $7.2 billion, arriving eighteen days after his predecessor called the turnaround ongoing and then quit. But the stock is up 33% in six months to within 25% of its high, the long-range plan was pushed out a year in May, the fourth quarter must produce about $27 million of free cash flow against negative $5.7 million a year ago, and at $30.82 the price already embeds about 5% perpetual growth from a business whose organic revenue the company itself guides to fall next quarter. Wait for a permanent CEO, a rebuilt plan and the FY2027 guide in December.
Research for discussion, not investment advice. Positions and sizing are the reader's decision.