2023-05-08 14:30:01 ET
Catalent ( NYSE: CTLT ) fell ~26% to reach a new 52-week low on Monday as Bank of America downgraded the contract manufacturer to Underperform from Neutral after the company sharply decreased its fiscal 2023 outlook for revenue and adj. EBITDA.
The announcement comes days after the Somerset, New Jersey-based company projected a materially adverse impact on its Q3 financials and FY23 results due to productivity issues and higher-than-expected costs experienced at three of its sites.
While the management indicated a relatively quick fix for the issues at the time, BofA analyst Derik de Bruin is not convinced, given the extent of problems the company is going through. With a $28 per share target on the stock, De Bruin cites a long-term impact on reputation and argues that the guidance cut is far higher than expected.
Noting that Catalent’s FY23 is “almost over,” de Bruin opines that the decision to lower guidance “raises even more questions about the nature of the productivity/operational issues that CTLT is facing.”
“With mounting operational and forecasting issues, visibility into forward estimates is severely limited and we see shares likely underperforming until these challenges are resolved and investor confidence is restored,” the analyst wrote.
More on Catalent
- Catalent tells stockholders to reject TRC Capital's tender offer for shares
- Catalent: A Promising Upside Opportunity In Play Despite Current Woes
For further details see:
Catalent hits 52-week low as guidance cut prompts BofA to downgrade