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Catalent (CTLT) Gains Post Deal With Elliott and Earnings Report
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Shares of Catalent, Inc. (CTLT - Free Report) , a global provider of drug development and manufacturing services, rose 5% on Tuesday after the company announced a deal with activist investor Elliott Management and reported its preliminary fourth-quarter and fiscal 2023 results.
Catalent’s shares gained 6.2% year to date against the industry’s decline of 3.9%. The S&P 500 Index has gained 16.4% in the same time frame.
Image Source: Zacks Investment Research
Elliot Deal
Catalent said that it reached an agreement with Elliott to appoint four new independent directors to its board nominated by Elliott. It has also formed a new committee to review its business, strategy and operations, as well as its capital allocation strategy to increase the long-term value of the company.
Elliott praised Catalent's role as a leading partner for the pharmaceutical and biotech industries. It said that with formation of new committee and addition of board members will help the company to use the full potential of its global scale and market-leading development and manufacturing capabilities. Per the agreement, Catalent needs to engage in transactions that would make Elliott own more than 10% of the company's common stock, or increase its economic exposure to more than 14.9% of its common stock.
Earnings Result
Catalent also reported its preliminary fourth-quarter and fiscal 2023 results, which showed a decline of 17% and 40% in revenues and earnings, respectively, compared with the prior-year period’s level.
The company attributed the lower revenues and earnings to the impact of COVID-19 on its business segments (especially Biologics segment), as well as operational challenges and higher costs related to labor, raw materials and transportation. These headwinds are likely to continue in fiscal 2024, but the company will benefit from its strategic investments in high-demand areas such as biologics, cell and gene therapy, and oral biotherapeutics.
Catalent’s outlook for fiscal 2024 was better than expected, reflecting sustainable growth. The company projects revenues between $4,300 million and $4,500 million, and adjusted EBITDA in the range of $680-$760 million for the full year. Moreover, unfavorable comparison for COVID-19 related sales in fiscal 2023 will be absent in the next financial year, which will provide a clear picture of the company’s business growth.
Catalent currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader medical space are Patterson Companies, Inc. (PDCO - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.5%. The company’s shares have risen 18% year to date compared with the industry’s 15.5% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 11% year to date against the industry’s 9.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 12.4% year to date compared with the industry’s 15.5% growth.
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Catalent (CTLT) Gains Post Deal With Elliott and Earnings Report
Shares of Catalent, Inc. (CTLT - Free Report) , a global provider of drug development and manufacturing services, rose 5% on Tuesday after the company announced a deal with activist investor Elliott Management and reported its preliminary fourth-quarter and fiscal 2023 results.
Catalent’s shares gained 6.2% year to date against the industry’s decline of 3.9%. The S&P 500 Index has gained 16.4% in the same time frame.
Image Source: Zacks Investment Research
Elliot Deal
Catalent said that it reached an agreement with Elliott to appoint four new independent directors to its board nominated by Elliott. It has also formed a new committee to review its business, strategy and operations, as well as its capital allocation strategy to increase the long-term value of the company.
Elliott praised Catalent's role as a leading partner for the pharmaceutical and biotech industries. It said that with formation of new committee and addition of board members will help the company to use the full potential of its global scale and market-leading development and manufacturing capabilities. Per the agreement, Catalent needs to engage in transactions that would make Elliott own more than 10% of the company's common stock, or increase its economic exposure to more than 14.9% of its common stock.
Earnings Result
Catalent also reported its preliminary fourth-quarter and fiscal 2023 results, which showed a decline of 17% and 40% in revenues and earnings, respectively, compared with the prior-year period’s level.
The company attributed the lower revenues and earnings to the impact of COVID-19 on its business segments (especially Biologics segment), as well as operational challenges and higher costs related to labor, raw materials and transportation. These headwinds are likely to continue in fiscal 2024, but the company will benefit from its strategic investments in high-demand areas such as biologics, cell and gene therapy, and oral biotherapeutics.
Catalent’s outlook for fiscal 2024 was better than expected, reflecting sustainable growth. The company projects revenues between $4,300 million and $4,500 million, and adjusted EBITDA in the range of $680-$760 million for the full year. Moreover, unfavorable comparison for COVID-19 related sales in fiscal 2023 will be absent in the next financial year, which will provide a clear picture of the company’s business growth.
Catalent, Inc. Price
Catalent, Inc. price | Catalent, Inc. Quote
Zacks Rank & Stocks to Consider
Catalent currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the broader medical space are Patterson Companies, Inc. (PDCO - Free Report) , HealthEquity, Inc. (HQY - Free Report) and McKesson Corporation (MCK - Free Report) .
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 9.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PDCO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.5%. The company’s shares have risen 18% year to date compared with the industry’s 15.5% growth.
HealthEquity, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 22%. HQY’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.1%.
The company’s shares have rallied 11% year to date against the industry’s 9.7% decline.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.7%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.1%.
The stock has gained 12.4% year to date compared with the industry’s 15.5% growth.