It has been about a month since the last earnings report for Catalent . Shares have lost about 18.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Catalent due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Catalent Q4 Earnings Beat Estimates, Revenues Lag
Catalent reported fourth-quarter fiscal 2022 adjusted earnings per share of $1.19, up 2.6% year over year. The bottom line exceeded the Zacks Consensus Estimate by 3.5%.
The adjustments include charges and benefits related to amortization, as well as acquisition, integration and other special items’ costs, among others.
The company’s GAAP earnings per share was $1.04 in the quarter, up 7.2% year over year.
Revenues in Detail
Revenues grossed $1.31 billion in the reported quarter, up 10.5% year over year. The metric, however, missed the Zacks Consensus Estimate by 0.9%.
At CER, revenues were up 15%.
The top line was driven by robust performances by most of its segments in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 10% year over year.
Full-year revenues were $4.83 billion, reflecting a 20.8% improvement from the year-ago period. The metric lagged the Zacks Consensus Estimate by 0.4%.
At CER, revenues were up 23%, whereas organic net revenues grew by 20%.
Segments in Detail
Effective Jul 1, 2022, Catalent changed its operating structure. The new organizational structure includes a shift from four operating and reporting segments to two segments — Biologics, and Pharma and Consumer Health.
However, the company's prior reporting structure through Jun 30, 2022, included the four segments — Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services.
Revenues in the Biologics segment rose 10.6% year over year (up 14% at CER) to $667 million in the quarter under review.
Revenues in the Softgel and Oral Technologies segment increased 16.3% from the year-ago period’s level (up 22% at CER) to $350 million.
The Oral and Specialty Delivery arm recorded revenues of $194 million, up 4.3% and 11% on a reported basis and at CER, respectively, year over year.
Revenues in the Clinical Supply Services business were down 0.9% year over year (up 4% at CER) to $104 million.
Operational Update
In the quarter under review, Catalent’s gross profit rose 11.2% to $488 million. Gross margin expanded 21 basis points (bps) to 37.2%.
Selling, general and administrative expenses rose 22.8% to $226 million year over year.
Adjusted operating profit totaled $262 million, rising 2.7% from the prior-year quarter’s level. Adjusted operating margin in the quarter contracted by 151 bps to 19.9%.
Financial Update
Catalent exited fiscal 2022 with cash and cash equivalents of $449 million compared with $896 million at the end of fiscal 2021. Total debt at the end of fiscal 2022 was $4.20 billion compared with $3.24 billion at the end of fiscal 2021.
Cumulative net cash provided by operating activities at the end of fiscal 2022 was $439 million compared with $433 million a year ago.
Guidance
Catalent has issued its financial outlook for fiscal 2023.
The company projects revenues within $4,975 million-$5,225 million for the full year. The Zacks Consensus Estimate for fiscal 2023 revenues is currently pegged at $5.28 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -12.48% due to these changes.
VGM Scores
At this time, Catalent has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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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Why Is Catalent (CTLT) Down 18.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Catalent . Shares have lost about 18.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Catalent due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Catalent Q4 Earnings Beat Estimates, Revenues Lag
Catalent reported fourth-quarter fiscal 2022 adjusted earnings per share of $1.19, up 2.6% year over year. The bottom line exceeded the Zacks Consensus Estimate by 3.5%.
The adjustments include charges and benefits related to amortization, as well as acquisition, integration and other special items’ costs, among others.
The company’s GAAP earnings per share was $1.04 in the quarter, up 7.2% year over year.
Revenues in Detail
Revenues grossed $1.31 billion in the reported quarter, up 10.5% year over year. The metric, however, missed the Zacks Consensus Estimate by 0.9%.
At CER, revenues were up 15%.
The top line was driven by robust performances by most of its segments in the reported quarter.
Organic net revenues (excluding the impact of acquisitions, divestitures and currency translation) increased 10% year over year.
Full-year revenues were $4.83 billion, reflecting a 20.8% improvement from the year-ago period. The metric lagged the Zacks Consensus Estimate by 0.4%.
At CER, revenues were up 23%, whereas organic net revenues grew by 20%.
Segments in Detail
Effective Jul 1, 2022, Catalent changed its operating structure. The new organizational structure includes a shift from four operating and reporting segments to two segments — Biologics, and Pharma and Consumer Health.
However, the company's prior reporting structure through Jun 30, 2022, included the four segments — Biologics, Softgel and Oral Technologies, Oral and Specialty Delivery, and Clinical Supply Services.
Revenues in the Biologics segment rose 10.6% year over year (up 14% at CER) to $667 million in the quarter under review.
Revenues in the Softgel and Oral Technologies segment increased 16.3% from the year-ago period’s level (up 22% at CER) to $350 million.
The Oral and Specialty Delivery arm recorded revenues of $194 million, up 4.3% and 11% on a reported basis and at CER, respectively, year over year.
Revenues in the Clinical Supply Services business were down 0.9% year over year (up 4% at CER) to $104 million.
Operational Update
In the quarter under review, Catalent’s gross profit rose 11.2% to $488 million. Gross margin expanded 21 basis points (bps) to 37.2%.
Selling, general and administrative expenses rose 22.8% to $226 million year over year.
Adjusted operating profit totaled $262 million, rising 2.7% from the prior-year quarter’s level. Adjusted operating margin in the quarter contracted by 151 bps to 19.9%.
Financial Update
Catalent exited fiscal 2022 with cash and cash equivalents of $449 million compared with $896 million at the end of fiscal 2021. Total debt at the end of fiscal 2022 was $4.20 billion compared with $3.24 billion at the end of fiscal 2021.
Cumulative net cash provided by operating activities at the end of fiscal 2022 was $439 million compared with $433 million a year ago.
Guidance
Catalent has issued its financial outlook for fiscal 2023.
The company projects revenues within $4,975 million-$5,225 million for the full year. The Zacks Consensus Estimate for fiscal 2023 revenues is currently pegged at $5.28 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -12.48% due to these changes.
VGM Scores
At this time, Catalent has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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
Estimates have been broadly trending downward for the stock, and the magnitude of this revision 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.