Catalent, Inc.

CTLT Details

Catalent, Inc. (NYSE: CTLT) is a global provider of advanced delivery technology, development solutions for drugs, protein, nucleic acid, gene therapy biologics, and commercial health products. Manufacturing and commercial product supply, development services, and clinical supply services are its key revenue sources. The Softgel and Oral Technologies, Biologics, Oral and Specialty Delivery divisions of CTLT's advanced delivery technology platforms aid in the treatment of patients. The US accounts for the bulk of the company’s sales, followed by Europe and the rest of the world.

Commercial Supply Agreement with Edenbridge Pharmaceuticals, LLC: On August 10, 2021, Catalent signed a commercial supply contract with Edenbridge for an innovative formulation of glycopyrrolate that uses its proprietary Zydis orally disintegrating tablet (ODT) delivery technology and is intended for the treatment of peptic ulcer patients. The Zydis glycopyrrolate formulation is pending US FDA approval, expected in December 2021.

Commitment to Reduce Carbon Footprint: CTLT declared on August 3, 2021, that as of July 1, 2021, 97% of its electricity comes from renewable sources such as wind, solar, hydroelectric, and biomass. In addition, it will purchase renewable energy certificates for all its sites in North America, South America, Europe, and most of its Asia-based plants.

Collaboration with DisperSol: On August 2, 2021, DisperSol Technologies, a clinical-stage pharmaceutical firm, and Catalent announced a strategic manufacturing partnership to expedite various DisperSol generic pharmaceuticals development. A commercial-scale KinetiSol technology manufacturing line will be installed at Catalent's manufacturing plant in Somerset, New Jersey, as part of the collaboration.

9MFY21 Results: The company reported a 30.89% rise in net revenues to USD 2.81 billion during 9MFY21 (ended March 31, 2021) compared to USD 2.15 billion during 9MFY20, due to an increase in revenue from the Biologics division. It witnessed a massive growth in net earnings to USD 402.6 million during 9MFY21 compared to USD 66.5 million during 9MFY20. As of March 31, 2021, its balance sheet stood with cash and cash equivalents (including marketable securities) of USD 1.06 billion, with a total debt of USD 3.22 billion.

Key Risks: The company conducts its business in various regions worldwide, including North America, South America, Europe, and the Asia-Pacific regions. As a result, global economic and regulatory changes, such as inflation, recession, and political changes in countries where the company has operations, could hurt its operations and cash flows.

Outlook: For FY21, CTLT expects its net revenue to be in the range of USD 3.88 to 3.98 billion and adjusted EBITDA to be around USD 975 to 1,015 million. CTLT also anticipates its net income for FY21 to be between USD 500 to 540 million.

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CTLT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: CTLT's share price surged 37.29% in the past twelve months and is currently trading close to the higher end of the 52-week range of USD 79.65 to USD 127.68. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is 62.18. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 109.11. Considering the uptick in the stock price, we believe the current price adequately reflects the business fundamentals and recommend a "Sell" rating on the stock at the current price of USD 120.25, down 1.21% as of August 10, 2021, 1:46 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.