Dj Dir Ryan Surrenders 2800 Of Catalent Inc >Ctlt

Investors interested in Medical - Drugs stocks are likely familiar with Jazz Pharmaceuticals (JAZZ) and Catalent (CTLT). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, Jazz Pharmaceuticals has a Zacks Rank of #2 (Buy), while Catalent has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that JAZZ is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

JAZZ currently has a forward P/E ratio of 6.37, while CTLT has a forward P/E of 51.52. We also note that JAZZ has a PEG ratio of 0.91. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CTLT currently has a PEG ratio of 1.71.

Another notable valuation metric for JAZZ is its P/B ratio of 1.89. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CTLT has a P/B of 3.04.

These metrics, and several others, help JAZZ earn a Value grade of A, while CTLT has been given a Value grade of D.

JAZZ stands above CTLT thanks to its solid earnings outlook, and based on these valuation figures, we also feel that JAZZ is the superior value option right now.

Zacks Investment Research

Catalent, Inc. CTLT reported first-quarter fiscal 2025 adjusted loss per share of 13 cents, flat year over year. The figure was wider than the Zacks Consensus Estimate of a loss of 11 cents per share.

The company’s GAAP loss per share was 71 cents during the quarter, narrower than the year-ago period’s loss of $4.19 per share.

Catalent’s Revenues in Detail

Revenues grossed $1.02 billion in the reported quarter, up 4.2% year over year. However, the metric lagged the Zacks Consensus Estimate by 5.3%.

At constant exchange rate or CER, revenues were also up 4%, primarily driven by growth in the manufacture of prescription products, increased demand for orally disintegrating Zydis commercial products and gene therapy offerings. However, this was partially offset by a decline in demand for COVID-19-related programs.

After excluding COVID-related revenues in the first quarter of fiscal 2025, net revenues increased 13% year over year.

The top line was driven by strength in both the Biologics and Pharma and Consumer Health (PCH) segment.

Shares of this company were up nearly 2.6% in yesterday’s after-hours trading.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

CTLT’s Segments in Detail

Catalent reports via two segments — Biologics and PCH.

Revenues in the Biologics segment rose 2.9% year over year on a reported basis (up 3% at CER) to $461 million in the quarter under review.

Revenues in the PCH segment increased 5.4% from the year-ago period (up 5% at CER) to $563 million.

Catalent’s Geographic Performance

Geographically, CTLT operates via three regions — the United States, Europe and Other.

Revenues from the United States were $658 million (up 2% year over year), while revenues from Europe were $331 million (up 20.8% year over year).

Revenues from Other region declined 22.7% year over year to $68 million.

Catalent, Inc. Price, Consensus and EPS Surprise

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

CTLT’s Operational Update

In the quarter under review, Catalent’s gross profit rose 7.1% to $181 million year over year. The gross margin expanded 48 basis points to 17.7%.

Selling, general and administrative expenses rose 22.9% to $252 million year over year.

Adjusted operating loss totaled $71 million compared with the prior-year quarter’s adjusted operating loss of $36 million.

Catalent’s Financial Update

Catalent exited first-quarter fiscal 2025 with cash and cash equivalents of $335 million compared with $289 million at the end of fiscal 2024. Total debt at the first quarter of fiscal 2025-end was $4.93 billion compared with $4.91 billion at the end of fiscal 2024.

Net cash provided by operating activities at the end of first-quarter fiscal 2025 was $61 million against net cash used in operating activities of $70 million a year ago.

CTLT’s Guidance

Catalent will not provide any outlook in light of the pending transaction with Novo Holdings.

Our Take

Catalent exited the first quarter of fiscal 2025 with solid year-over-year improvement in its overall top-line results. The revenue uptick in both segments and the majority of geographic regions were impressive as well. The continued strength in CTLT’s Zydis commercial products and gene therapy offerings buoys optimism. The gross margin expansion was an added plus.

However, Catalent’s lower-than-expected results and lower revenues from the Other region in the fiscal first quarter were disappointing. The company continued to face escalating operating costs during the quarter, which was discouraging.

Catalent’s Zacks Rank and Key Picks

CTLT currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, ResMed Inc. RMD and Boston Scientific Corporation BSX.

Quest Diagnostics, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2024 adjusted earnings per share (EPS) of $2.30, beating the Zacks Consensus Estimate by 1.8%. Revenues of $2.49 billion outpaced the consensus mark by 3.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has a long-term estimated growth rate of 6.5%. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.4%.

ResMed reported first-quarter fiscal 2025 adjusted EPS of $2.20, beating the Zacks Consensus Estimate by 8.4%. Revenues of $1.22 billion surpassed the Zacks Consensus Estimate by 2.9%. It currently carries a Zacks Rank #2.

ResMed has a long-term estimated growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.4%.

Boston Scientific reported third-quarter 2024 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 8.6%. Revenues of $4.21 billion surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2.

Boston Scientific has a long-term estimated growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Zacks Investment Research