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Why Is Catalent (CTLT) Up 0.4% Since Last Earnings Report?

It has been about a month since the last earnings report for Catalent (CTLT). Shares have added about 0.4% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Catalent due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Catalent Q3 Earnings Lag Estimates, Gross Margin Up

Catalent reported third-quarter fiscal 2024 adjusted loss per share of 6 cents, which was narrower than the year-ago period’s loss per share of 9 cents. The Zacks Consensus Estimate was pegged at an earnings per share of 24 cents.

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The adjustments include charges related to amortization, and impairment charges and gain/loss on the sale of assets, among others.

The company’s GAAP loss per share was 56 cents during the quarter, narrower than the year-ago period’s loss per share of $1.26.

Revenues in Detail

Revenues grossed $1.07 billion in the reported quarter, up 3.6% year over year. However, the metric missed the Zacks Consensus Estimate by 3.1%.

At CER, revenues were also up 3%.

The top line was driven by strength in the PCH segment despite being hampered by soft performances in its Biologics segment in the reported quarter.

Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 3% year over year.

Segments in Detail

Catalent reports via two segments — Biologics and PCH.

Revenues in the Biologics segment fell 2.9% year over year on a reported basis (down 3% at CER) to $461 million in the quarter under review.

Revenues in the PCH segment increased 8.9% from the year-ago period (up 8% at CER) to $613 million.

Operational Update

In the quarter under review, Catalent’s gross profit rose 27.2% to $229 million. The gross margin expanded 396 basis points to 21.3%.

Selling, general and administrative expenses rose 12.6% to $214 million year over year.

Adjusted operating profit totaled $15 million against the prior-year quarter’s adjusted operating loss of $10 million.

Financial Update

Catalent exited third-quarter fiscal 2024 with cash and cash equivalents of $162 million compared with $229 million at the end of the fiscal second quarter. Total debt at the third quarter of fiscal 2024-end was $4.98 billion compared with $5.01 billion at the end of the fiscal second quarter.

Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2024 was $54 million compared with $58 million a year ago.

Guidance

Catalent will not provide any outlook in light of the pending transaction with Novo Holdings.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Catalent has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Catalent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Catalent is part of the Zacks Medical - Drugs industry. Over the past month, Zoetis (ZTS), a stock from the same industry, has gained 5.1%. The company reported its results for the quarter ended March 2024 more than a month ago.

Zoetis reported revenues of $2.19 billion in the last reported quarter, representing a year-over-year change of +9.5%. EPS of $1.38 for the same period compares with $1.31 a year ago.

Zoetis is expected to post earnings of $1.49 per share for the current quarter, representing a year-over-year change of +5.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Zoetis. Also, the stock has a VGM Score of C.

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