A Technical Look at Catalent Stock After Last Week's Big Update

CTLT has fallen about 17% year-to-date

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Catalent Inc (NYSE:CTLT) is a multinational company that enables pharma, biotech, and consumer health partners to optimize product development, launch, and supply of treatments for patients around the world. On Tuesday, July 5, Catalent announced changes to its operating structure and executive leadership team that went into effect July 1. This new structure features a shift from four reporting segments to two. One segment will focus on biologics and the other segment will on pharmaceuticals and consumer health.

Catalent stock initially surged on the announcement, though it lost momentum near a familiar ceiling at the 320-day moving average, which coincides with the $113 area. The stock was last seen down 4.1% at $106.22, and it's staring at a 17% year-to-date deficit. However, recent support at the 80-day moving average could capture additional downside.

ctlt july 12

Despite that, Catalent stock maintains a high valuation at a forward price-earnings ratio of 27.47 and a price-sales ratio of 4.18. The company offers a weak balance sheet with $4.2 billion in debt and just $880 million in cash, indicating another risk factor for fundamentals-based investors.

Catalent has produced consistent annual top and bottom line growth over the past few years. Its trailing 12-month revenues have increased 17.6% since reporting fiscal 2021 figures and are up 86.8% since fiscal 2019. CTLT has also produced 267.4% net income growth since fiscal 2019 but has seen its trailing one-month net income decrease 8.3% since fiscal 2021.

Still, CTLT is estimated to end fiscal 2022 with 23.7% earnings growth and 21.8% revenue growth. Additionally, the business is expected to increase its earnings by 10.4% and revenues by 9.4% for fiscal 2023, perhaps justifying Catalent stock's premium price.

 

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