In a report published Friday, Bank of America analyst Derik de Bruin reiterated a Buy rating on Catalent CTLT, and raised the price target from $26.00 to $28.00.
In the report, Bank of America noted, “F1Q revenues of $418mn (+1% y/y, +1% constant currency (‘CC')) were above our $406mn (-1.9% y/y, -1.5% CC) est. and the Street's $411mn. Adj. EBITDA was $83mn (+2% y/y; 19.9% margin), vs. our $79mn est. (19.4% margin), driven by driven by favorable product mix shifts in softgels (from Rx to OTC), modified release technologies (MRT), and clinical services. Adj. net income was $13.4mn, below our $21.5mn est., as the mandatory waiting period to use IPO proceeds delayed timing of debt paydown and increased interest expense. As a result, Adj. EPS were $0.13 vs. our/Street est. of $0.20. That said, CTLT is quickly deleveraging with Net Debt / Adj. EBITDA at 4.0x (vs. 6.1x at 6/30). Overall, CTLT's seasonally weaker F1Q was better than expected, and the reaffirmation of guidance despite mounting F/X headwinds was reassuring, suggesting better core growth.”
Catalent closed on Thursday at $23.81.
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