Catalent (CTLT) to Report Q2 Earnings: What's in the Cards?
Catalent, Inc. CTLT is scheduled to report its second-quarter fiscal 2024 results on Feb 9, before market open.
In the last reported quarter, the company’s preliminary loss per share of 10 cents was narrower than the Zacks Consensus Estimate by a loss of 13 cents per share. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on two occasions and missed the same in the other two, delivering an earnings surprise of 9.2%, on average.
Let’s see how things have shaped up prior to this announcement.
Factors to Note
Biologics Business
On the preliminary first-quarter fiscal 2024 earnings call in November 2023, management stated that in Biologics, they have been witnessing the impact of operational enhancement and strong commercial demand on Catalent’s financial results. Per management, in the fiscal first quarter, the company’s drug product business in Brussels and gene therapy business at the Harmans campus (located close to Baltimore Washington International Airport) each had strong year-over-year and sequential growth as well as margin improvements. Management also stated that its strong pipeline for gene therapy includes several programs in late-stage, one of which was recently signed. This momentum is likely to have continued in the fiscal second quarter, thereby driving up Catalent’s revenues.
On the same call, management also stated that in Bloomington, the company continued to improve operational performance and ramp up the assets needed to satisfy demand across multiple new products, including GLP-1s. Catalent’s non-COVID non-Sarepta Biologics business is expected to register growth as it delves into GLP-1 production and brings on incremental capacity and improves productivity. This is likely to have significantly driven its fiscal second-quarter performance.
The Zacks Model estimates the fiscal second-quarter Biologics revenues to be $456.2 million.
Catalent, Inc. Price and EPS Surprise
Catalent, Inc. price-eps-surprise | Catalent, Inc. Quote
Pharma and Consumer Health
On the fiscal first quarter of 2024 earnings call, management stated that the Pharma and Consumer Health (PCH) segment’s revenue growth in the consumer business is expected to decline in the first half of fiscal 2024 and then return to growth in the third quarter. This raises our apprehension about the segment’s performance in the fiscal second quarter of 2024.
However, management’s confirmation of Catalent’s new strategic contract with a key consumer health company for its gummy pill offering looks promising. Per management, this is in line with its strategy to increase the penetration of the legacy Bettera business in the top global consumer health companies. This raises our optimism about its performance in the to-be-reported quarter.
In the last reported quarter, the segment's revenue growth continued to benefit from Catalent’s acquired Metrics business. The company is likely to have gained from the acquired business in the fiscal second quarter as well, thereby pushing up the segmental revenues.
Our model estimates the fiscal second-quarter PCH revenues to be $559.1 million.
Novo Holdings Acquisition
Catalent recently entered into a merger agreement with Novo Holdings, under which Novo Holdings will acquire Catalent in an all-cash transaction. The merger is expected to close toward the end of calendar year 2024, subject to customary closing conditions.
Per Catalent’s management, the company is likely to benefit from Novo Holdings’ significant resources to accelerate investment in its business and enhance key offerings as it continues to offer premium development and manufacturing solutions for pharma and biotech customers.
The Estimate Picture
For second-quarter fiscal 2024, the Zacks Consensus Estimate for total revenues of $1.01 billion implies a decline of 11.8% from the prior-year quarter’s reported figure.
The consensus estimate for loss per share is pegged at 3 cents.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is not the case here, as you can see below.
Earnings ESP: Catalent has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are a few stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.
GoodRx Holdings, Inc. GDRX has an Earnings ESP of +15.91% and a Zacks Rank of 2. GDRX has an estimated growth rate of 14.3% for 2024. You can see the complete list of today’s Zacks #1 Rank stocks here.
GoodRx Holdings’ earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 18.3%.
Health Catalyst, Inc. HCAT has an Earnings ESP of +300.00% and a Zacks Rank of 2. HCAT has an estimated growth rate of 61.5% for 2024.
Health Catalyst’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 185.4%.
Merit Medical Systems, Inc. MMSI has an Earnings ESP of +1.44% and carries a Zacks Rank of 2 at present. MMSI has an estimated long-term growth rate of 11.5%.
Merit Medical’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 14.4%.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
Catalent, Inc. (CTLT) : Free Stock Analysis Report
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GoodRx Holdings, Inc. (GDRX) : Free Stock Analysis Report
