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Catalent (CTLT) Up 0.4% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Catalent (CTLT - Free Report) . Shares have added about 0.4% in that time frame, outperforming 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 drivers.
Catalent Q3 Earnings Beat Estimates, FY22 View Up
Catalent reported third-quarter fiscal 2022 adjusted earnings per share of $1.04, up 26.8% year over year. The bottom line exceeded the Zacks Consensus Estimate by 10.6%.
The adjustments include charges and benefits related to amortization, as well as acquisition, integration and other special items’ costs.
The company’s GAAP earnings per share was 78 cents in the quarter, down 38.1% year over year.
Revenues in Detail
Revenues grossed $1.27 billion in the reported quarter, up 20.9% year over year. The metric surpassed the Zacks Consensus Estimate by 4.4%.
At constant exchange rate or CER, revenues were up 23%.
The top line was driven by robust performances by most of the segments in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 20% year over year.
Segments in Detail
Revenues in the Biologics segment rose 28.3% year over year (up 30% at CER) to $698 million in the quarter under review.
Revenues in the Softgel and Oral Technologies segment increased 32.8% from the year-ago period’s level (up 37% at CER) to $324 million.
The Oral and Specialty Delivery arm recorded revenues of $154 million, down 9.9% and 8% on a reported basis and at CER, respectively, year over year.
Revenues in the Clinical Supply Services business rose 1% year over year (up 3% at CER) to $101 million.
Operational Update
In the quarter under review, Catalent’s gross profit rose 15.6% to $423 million. However, gross margin contracted 153 basis points (bps) to 33.2%.
Selling, general and administrative expenses rose 19.7% to $207 million year over year.
Adjusted operating profit totaled $216 million, rising 11.9% from the prior-year quarter’s level. Adjusted operating margin in the quarter contracted by 136 bps to 16.9%.
Financial Update
Catalent exited the third quarter of fiscal 2022 with cash and cash equivalents of $786 million compared with $849 million at the end of fiscal second quarter. Total debt at the end of the fiscal third quarter was $4.19 billion compared with $4.22 billion at the end of fiscal second quarter.
Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2022 was $370 million compared with $299 million a year ago.
Guidance
Catalent has raised its earlier-provided financial outlook for fiscal 2022.
The company now projects revenues within $4,800 million-$4,900 million for the full year, up from the previous projection of $4,740 million-$4,860 million. The Zacks Consensus Estimate for fiscal 2022 revenues is currently pegged at $4.80 billion, which matches with the lower-end of the company’s guidance.
For fiscal 2023, Catalent expects its organic, CER net revenue growth to be in line with its previously announced range of long-term net revenue growth of 8-10% over comparable fiscal 2022 figures. This outlook is based partly on the company’s projection of strong commercial demand for products not related to COVID-19, and increased utilization of both current and recently acquired assets.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Catalent has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Catalent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Catalent (CTLT) Up 0.4% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Catalent (CTLT - Free Report) . Shares have added about 0.4% in that time frame, outperforming 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 drivers.
Catalent Q3 Earnings Beat Estimates, FY22 View Up
Catalent reported third-quarter fiscal 2022 adjusted earnings per share of $1.04, up 26.8% year over year. The bottom line exceeded the Zacks Consensus Estimate by 10.6%.
The adjustments include charges and benefits related to amortization, as well as acquisition, integration and other special items’ costs.
The company’s GAAP earnings per share was 78 cents in the quarter, down 38.1% year over year.
Revenues in Detail
Revenues grossed $1.27 billion in the reported quarter, up 20.9% year over year. The metric surpassed the Zacks Consensus Estimate by 4.4%.
At constant exchange rate or CER, revenues were up 23%.
The top line was driven by robust performances by most of the segments in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 20% year over year.
Segments in Detail
Revenues in the Biologics segment rose 28.3% year over year (up 30% at CER) to $698 million in the quarter under review.
Revenues in the Softgel and Oral Technologies segment increased 32.8% from the year-ago period’s level (up 37% at CER) to $324 million.
The Oral and Specialty Delivery arm recorded revenues of $154 million, down 9.9% and 8% on a reported basis and at CER, respectively, year over year.
Revenues in the Clinical Supply Services business rose 1% year over year (up 3% at CER) to $101 million.
Operational Update
In the quarter under review, Catalent’s gross profit rose 15.6% to $423 million. However, gross margin contracted 153 basis points (bps) to 33.2%.
Selling, general and administrative expenses rose 19.7% to $207 million year over year.
Adjusted operating profit totaled $216 million, rising 11.9% from the prior-year quarter’s level. Adjusted operating margin in the quarter contracted by 136 bps to 16.9%.
Financial Update
Catalent exited the third quarter of fiscal 2022 with cash and cash equivalents of $786 million compared with $849 million at the end of fiscal second quarter. Total debt at the end of the fiscal third quarter was $4.19 billion compared with $4.22 billion at the end of fiscal second quarter.
Cumulative net cash provided by operating activities at the end of third-quarter fiscal 2022 was $370 million compared with $299 million a year ago.
Guidance
Catalent has raised its earlier-provided financial outlook for fiscal 2022.
The company now projects revenues within $4,800 million-$4,900 million for the full year, up from the previous projection of $4,740 million-$4,860 million. The Zacks Consensus Estimate for fiscal 2022 revenues is currently pegged at $4.80 billion, which matches with the lower-end of the company’s guidance.
For fiscal 2023, Catalent expects its organic, CER net revenue growth to be in line with its previously announced range of long-term net revenue growth of 8-10% over comparable fiscal 2022 figures. This outlook is based partly on the company’s projection of strong commercial demand for products not related to COVID-19, and increased utilization of both current and recently acquired assets.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Catalent has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Catalent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.