A month has gone by since the last earnings report for Catalent (CTLT). Shares have added about 3.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Catalent due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Catalent’s Stock Gains Despite Q1 Earnings Miss, Gross Margin Up

Catalent 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 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 PCH segment.

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

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.

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.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -86.36% due to these changes.

VGM Scores

At this time, Catalent has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Catalent has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Catalent belongs to the Zacks Medical - Drugs industry. Another stock from the same industry, Zoetis (ZTS), has gained 2.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

Zoetis reported revenues of $2.39 billion in the last reported quarter, representing a year-over-year change of +11%. EPS of $1.58 for the same period compares with $1.36 a year ago.

Zoetis is expected to post earnings of $1.38 per share for the current quarter, representing a year-over-year change of +11.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.1%.

Zoetis has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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