Analyst David Windley of Jefferies maintained a Hold rating on Catalent (CTLT – Research Report), with a price target of $63.50.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding the acquisition of Catalent (CTLT) by Novo Holdings. The all-cash deal, valued at $63.50 per share, is part of a strategic move that includes the divestiture of three major Catalent fill/finish sites to Novo Nordisk, which will bolster its diabetes and obesity drug franchises. Despite this transaction being in line with the company’s strategic review and expectations following activist shareholder pressures, the nature of the deal with a Novo entity was unexpected, indicating a substantial premium for control over the supply chain. There are noted risks, such as regulatory sensitivities and the timeframe required to close the deal, which contribute to the Hold rating.
Moreover, the valuation of Catalent at 19.5 times its projected CY24 EBITDA, especially given the history of quality issues at the fill/finish facilities, suggests investors should find the valuation favorable. Yet, the deal’s intricacies, including the steep price paid by Novo Nordisk for the fill/finish sites, and the remaining Catalent operations being acquired for a significantly lower EBITDA multiple, hint at complexities in the valuation. The potential regulatory concerns about the vertical integration and its impact on supply for competitors, alongside the necessity for CTLT’s fill/finish customers to seek alternative suppliers, add to the cautious stance reflected in the Hold rating.
In another report released on February 5, Barclays also assigned a Hold rating to the stock with a $47.00 price target.
See the top stocks recommended by analysts >>
TipRanks tracks over 100,000 company insiders, identifying the select few who excel in timing their transactions. By upgrading to TipRanks Premium, you will gain access to this exclusive data and discover crucial insights to guide your investment decisions. Begin your TipRanks Premium journey today.
Catalent (CTLT) Company Description:
Catalent, Inc. is a holding company, which engages in the provision of delivery technologies and development solutions for drugs, biologics, and consumer and animal health products. It operates through the following segments: Softgel Technologies; Biologics and Specialty Drug Delivery; Oral Drug Delivery; and Clinical Supply Services. The Softgel Technologies segment formulate, develop, and manufacture services for soft capsules. The Biologics and Specialty Drug Delivery segment develops and manufacture services for blow-fill-seal unit doses, prefilled syringes, vials, and cartridges; analytical development and testing services for large molecules; inhaled products for delivery via metered dose inhalers, dry powder inhalers, and intra-nasal sprays. The Oral Drug Delivery segment focuses in the formulation development and manufacturing technologies, and related solutions including: clinical development and commercial manufacturing of a range of oral dose forms, including proprietary fast-dissolve Zydis tablets and both conventional immediate and controlled release tablets, capsules, and sachet products. The Clinical Supply Services segment includes packaging, labeling, storage, distribution, and inventory management for drugs and biologics in clinical trials. The company was founded in April 2007 and is headquartered in Somerset, NJ.
Read More on CTLT:
- Catalent Inc (CTLT) Q2 Earnings Cheat Sheet
- Novo Nordisk price target raised to $135 from $115 at TD Cowen
- Catalent downgraded to Sector Perform from Outperform at RBC Capital
- Catalent Announces Strategic Merger Agreement with Novo Holdings
- Catalent Finalizes Strategic Merger with Creek Parent, Inc.
