Catalent's Q1 Performance Beat Expectations: Analyst Says Main Focus On Manufacturing Outlook For Sarepta's Gene Therapy

Catalent Inc's CTLT Q1 FY24 revenue of $982 million decreased 4% as reported, or 6%, in constant currency, beating the consensus of $939.14 million.

Overall, organic net revenue decreased by 8% over the same period.

Q1 24 net loss of $(715) million includes non-cash goodwill impairment charges of $700 million.

Adjusted net loss was $(19) million, or $(0.10) per diluted share, compared to adjusted net income of $61 million, or $0.34 per diluted share, a year ago, beating the consensus of $(0.14).

Guidance: Catalent reaffirms FY24 sales guidance of $4.3 billion-$4.5 billion versus the consensus of $4.36 billion.

Catalent forecasts FY24 adjusted EBITDA Of $680 million-$760 million and adjusted net income of $113 million-$175 million.

William Blair observes that Sarepta Therapeutics Inc's SRPT Elevidys Phase 3 EMBARK study is missing its primary goal. Yet, the company pushes ahead with increased production, anticipating label extension to encompass older and non-ambulatory patients. 

Catalent projects Sarepta's share to reach around 16% of total revenue by fiscal 2024.

Analyst assessments support the existing 4- and 5-year-old label, hinting at possible enlargement to encompass boys aged 6 to 7 post-FDA assessment. However, expanding to older, especially non-ambulatory patients, carries heightened risks. While including boys aged 6 to 7 could alleviate potential fiscal 2025 revenue decline, William Blair remains apprehensive about Sarepta's long-term revenue prospects.

Price Action: CTLT shares are up 11.6% at $39.95 on the last check Wednesday.