Struggling biotechnology specialist Catalent (NYSE:CTLT) popped significantly higher on Friday despite poor financial performances and prognostications. Nevertheless, management helped soothe nerves by providing an update on the situation. In response, CTLT stock gained about 16% in the late-afternoon hours.
Catalent delayed its third quarter of the 2023 fiscal year earnings release for the second time this month, initially posing severe concerns about CTLT stock. According to a Benzinga report, in April, Catalent reported productivity challenges and higher-than-expected costs at its drug production and manufacturing facilities in the U.S. and Belgium.
Nevertheless, CTLT stock rebounded sharply as management provided an update on the matter. According to The Wall Street Journal, Catalent expects to earn between $725 million and $750 million in adjusted EBITDA this fiscal year.
To be sure, the expectation sits well below the prior forecast. However, market participants appear confident that Catalent’s aforementioned challenges are solvable, per the WSJ.
CTLT Stock Remains a Challenging Prospect
Although the Friday boost helped invigorate CTLT stock on paper, it’s far from being the lifeline that Catalent needs. For example, in the trailing month, shares tumbled about 17%, reflecting the overall volatility associated with the biotech enterprise. For the year, shares fell roughly 19%.
For those that view the matter as a glass half-full, KeyBanc Capital markets analyst Paul Knight reiterated the bullish theme. “I think people are starting to get a narrower bandwidth from management on guidance,” the expert stated, referencing the achievability of the updated guidance.
As well, management showed remorse and dedication to righting the ship. “Our financial performance and operational execution have all fallen significantly short of our expectations and our February forecast and we accept the responsibility for disappointing you,” stated Catalent CEO Alessandro Maselli.
Still, options flow data provided by Fintel shows that sentiment has been overall conspicuously negative for CTLT stock.
In addition, insider transactions don’t provide much confidence for the embattled biotech. Per Fintel, the last time an insider purchased CTLT stock was back in February 2020. In the trailing one-year period, shares fell nearly 63%.
Why It Matters
Despite the troubles that CTLT stock courted, analysts still peg shares as a moderate buy. This assessment breaks down as seven “buys,” four “holds” and one “sell.” On average, the experts’ price target lands at $55.50, implying over 49% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
