Catalent (CTLT) to Report Q4 Earnings: What's in the Cards?

Catalent, Inc. CTLT is scheduled to report fourth-quarter fiscal 2022 results on Aug 29, before market open.

In the last-reported quarter, the company’s earnings of $1.04 per share surpassed the Zacks Consensus Estimate by 10.6%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on all occasions, 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

Per Catalent’s fiscal third-quarter earnings update in May, its Biologics segment has been witnessing strength over the past few months on the back of broad base of service offerings within its biologics segment and were partly driven by demand for COVID vaccines. Per management, the demand continues to remain strong in this segment, including a notable uptick from several of Catalent’s large gene therapy customers for viral vector manufacturing. This trend is likely to have continued in the fiscal fourth quarter, thereby contributing to revenues.

Catalent has also been witnessing solid results in its European drug product space, where it completed a $30-million (€27 million) project at its facility in Limoges, France in March. The project completion is expected to convert the site into a European center of excellence for biopharmaceutical development, drug product fill/finish services and packaging. Catalent’s drug product facility in Brussels has been continuing to make substantial progress, thereby enabling it to restart manufacturing operations at the site while enhancing the company’s overall site operations. These developments raise optimism regarding Catalent’s performance in this space, which is likely to have driven its fiscal fourth-quarter revenues.

Catalent, Inc. Price and EPS Surprise

Catalent, Inc. price-eps-surprise | Catalent, Inc. Quote

In May, Catalent introduced its new UpTempo Virtuoso platform process. The platform is designed for the development and CGMP (current good manufacturing practices) manufacturing of adeno-associated viral vectors. Catalent’s campus in Bloomington, IN, which had served as a key growth driver for the company by enabling it to quickly scale high-speed filling lines on behalf of its COVID-19 vaccine customers, is likely to have maintained its strength on the back of continued demand. These factors are likely to have significantly driven its revenues in the to-be-reported quarter.

Catalent is also likely to have continued to benefit from robust contributions by its commercial-scale viral vector manufacturing suites, as well as by associated support facilities and services at its gene therapy campus in Harmans, MD (expansion project was announced in October 2021). The company’s segmental revenues are also likely to be aided by the addition of a new high-speed syringe filling line. Apart from this, Catalent continues to benefit from its facility in Anagni, Italy. These developments are likely to have contributed to segmental revenues of the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal fourth-quarter Biologics revenues is pegged at $693 million, suggesting an improvement of 14.9% from the year-ago quarter’s reported figure.

Pharma and Consumer Health

In July, Catalent’s management announced that it had restructured its reporting segments. Following the structural change, its erstwhile Softgel & Oral Technologies, Oral & Specialty Delivery, and Clinical Supply Services segments have been consolidated into the newly formed Pharma and Consumer Health segment.

In June, Catalent announced that it had expanded its primary packaging capabilities at its clinical supply facility in Shiga, Japan. It had installed a high-speed blister packaging line to augment its existing automated bottling line. The same month, Catalent entered into a development agreement with MigVax to leverage its proprietary Zydis Bio orally disintegrating tablet technology for delivering the MigVax-101 vaccine. These developments buoy optimism about the stock.

In April, Catalent announced its completion of a significant expansion of its nasal capabilities at its Morrisville, Research Triangle Park, NC, facility to provide improved services for the development and manufacturing of unit and bi-dose nasal spray products. The same month, the company announced its completion of the installation and commissioning of four new high-throughput high-bay cGMP manufacturing suites at its facility in Kansas City, MO. These are likely to have contributed to the segment’s revenue in the to-be-reported quarter.

Catalent is also likely to have continued to witness recovery in its offerings of complex oral solids from the pandemic related headwinds in the fiscal fourth quarter.  The company is also likely to have benefited from the Bettera Holdings acquisition.

The Estimate Picture

For fourth-quarter fiscal 2022, the Zacks Consensus Estimate for total revenues of $1.33 billion implies an improvement of 12.1% from the prior-year quarter’s reported figure.

The consensus estimate for earnings is pegged at $1.13 per share, implying a decline of 2.6% from the prior-year quarter’s reported number.

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:

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

Some better-ranked stocks in the broader medical space that have announced quarterly results are McKesson Corporation MCK, AMN Healthcare Services, Inc. AMN and ShockWave Medical, Inc. SWAV.

McKesson, carrying a Zacks Rank #2, reported first-quarter fiscal 2023 adjusted earnings per share (EPS) of $5.83, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the consensus mark by 5.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

McKesson has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 13%.

AMN Healthcare, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.31, which beat the Zacks Consensus Estimate by 11.8%. Revenues of $1.43 billion outpaced the consensus mark by 4.8%.

AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 15.7%.

ShockWave Medical reported second-quarter 2022 EPS of 68 cents, which surpassed the Zacks Consensus Estimate by 58.1%. Second-quarter revenues of $120.7 million outpaced the Zacks Consensus Estimate by 12.6%. It currently flaunts a Zacks Rank #1.

ShockWave Medical has an estimated growth rate of 33.1% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average being 180.1%.

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