SINGAPORE (Tuesday, 7 September 2021) – At first glance, the price chart of Catalent (NYSE: CTLT) was unimpressive compared with other Covid vaccine plays such as Moderna (NASDAQ: MRNA).
Catalent’s share price had been in a long and shallow sideways trade since February this year.
Things, however, took a turn on 25 August 2021, when it’s share price convincingly broke out of resistance at USD 127.68, just ahead of its Q4 earnings report on 30 August 2021.
Catalent closed NYSE trading Friday 3 September at USD 140.35, up 0.54%. US markets were closed on Monday.
Source:https://www.tradingview.com/x/wsZsgxpK/
Shariah-compliant Catalent provides delivery technologies and development solutions for drugs, biologics, and consumer and animal health products. Its segments include Softgel Technologies, Drug Delivery Solutions and Clinical Supply Services. According to Boursa, Idealratings’ equities screener, Catalent has zero non-permissible income.
Catalent’s share price had fallen off from its peak on 16 February and plunged below its 50-Day Moving Average in early March (blue line on chart). It recovered fully to trade above the 50-DMA only in June after repeatedly bouncing off from the 200-DMA depicted by the black line on the chart.
The gradual upward move that ensued was supported by expectations that the company’s earnings growth would be positive starting June.
Consensus estimates expected earnings to grow 22% from the previous quarter. The company’s earnings were expected to benefit following AstraZeneca’s announcement that it will move its Covid-19 vaccine production to a factory owned by Catalent.
Astrazeneca has been on the lookout for an alternative production site after the US government stopped it from using Emergent Biosolutions Inc.’s site after workers contaminated Johnson Johnson’s vaccine with ingredients from Astrazeneca’s, which was also being produced in the same premises at the time. (Refer: https://finance.yahoo.com/news/astrazeneca-seeks-switching-covid-19-123302574.html?guccounter=1)
The company also announced the USD 1bn acquisition of Bettera, a leading manufacturer in the high growth gummy, soft chew and lozenge segments of the nutritional supplements market.
Revenue surged past the USD 1bn mark in the fourth quarter ended 30 June to USD 1.19bn, up from USD 947 million in the fourth quarter of last year. Most analysts now foresee further growth in revenue of the company in 2022 with an increase of over 14% year-on-year, with an EPS of USD 3.27.
Year-to-date Catalent’s share price has risen 28.65% with a market capitalisation of over USD 23bn.
The company is expected to release its next earnings report on 3 November 2021. Based on the improving fundamentals and the price action, as well as the race to contain the Delta variant globally, Catalent share price could potentially move towards the USD 150/share to USD 160/share range. However, any corrective price action moving below the 50-DMA call for a further revision of the price target. -/- www.halaluniverse.net
Disclaimer: Mr Mukhriz Mangsor is a Certified Financial Technician and an independent trader who contributes to www.halaluniverse.net on a regular basis. He focuses his attention on the technology stocks listed on Nasdaq. The content of this article are not recommendations to buy or sell a security. All information is intended as information for educational purposes only and not as investment advice. Readers are advised to seek professional investment advice from licensed investment advisors before investing.
Credit: Photo by Choknih Khongchum from Pexels.
