Shares of Catalent Inc CTLT 1.46% hit new 52-week highs on Wednesday and again on Thursday after reporting first-quarter earnings and raising full-year guidance. The company could have more upside as a backdoor way to play several companies working on COVID-19 vaccines.
COVID-19 Vaccines: Catalent is a company involved in the development and manufacturing of drugs, biologics, gene therapies and consumer health products.
The company has contracts in place with Moderna Inc MRNA 1.55%, AstraZeneca AZN 1.03% and Johnson & Johnson JNJ 1.84% for their COVID-19 vaccines.
The deals with Moderna, AstraZeneca and Johnson & Johnson cover vial filling, packaging and staffing for the production of the vaccines. The deals with Moderna and AstraZeneca were each worded with 100 million or more doses.
All three of these company’s candidates are part of the U.S. government’s Operation Warp Speed program.
Having deals in place with three of the lead candidates for a COVID-19 vaccine make Catalent a great way to invest in “the thing behind the thing,” as the company could benefit from approvals from its partners with manufacturing plans in place.
The important thing for investors to consider with the stock at 52-week highs is current guidance does not assume marketing approval for any of the COVID-19 vaccines. If one is approved, the guidance and share price of Catalent could rapidly change.
Manufacturing: Catalent has made several acquisitions and purchases to scale up its manufacturing capacity.
The company began ramping up manufacturing capabilities prior to the COVID-19 pandemic but is now aggressively expanding to help cover the high number of vials that will be needed.
Catalent’s Bloomington factory has seen several investments over the last two years and will have high-speed filling capacity for three vial lines in the future.
By April 2021, Catalent will be able to produce 80 million vials a year from its Bloomington factory.
Financials: Catalent reported first-quarter revenue of $845.7 million, up 27% year-over-year.
The Biologics segment saw year-over-year growth of 100% to $377.1 million. This segment made up 44% of revenue and had impressive growth from the COVID-19 partner revenues.
The company’s goal is to get its Biologics division to 50% of revenue and it's reaching that total faster than expected.
On its earnings call, Catalent said outside of the COVID-19 partnerships, the company still had double-digit year-over-year growth in the third quarter.
“New demand related to potential COVID-19 vaccines and treatments, were partially offset by headwinds in our softgel and oral technologies and oral and specialty delivery segments,” said CEO John Chiminski.
In the last fiscal year, Catalent reported year-over-year revenue growth of 24% to $3.09 billion.
Catalent raised its full-year guidance on the first-quarter call. The company now expects full-year revenue to be in a range of $3.58 billion to $3.78 billion. This is up from prior guidance of $3.45 billion to $3.60 billion.
Benzinga’s Take: With several companies working on COVID-19 vaccines, it can be hard to predict a winner. Several of them have faced setbacks and it seems a different company is leading the race every week.
Trading or investing Catalent provides a couple of shots on goal for a winning investment in the COVID-19 vaccine race. The company is involved in more than 60 compounds and has diversity aside from COVID-19 vaccines.
Aside from the COVID-19 vaccine, the company acquired Paragon Bioservices, a company in the gene therapy market with signed contracts in place.
The company was added to the S&P 500 on Sept. 21 and could be getting more investor eyes on it as well.
https://www.benzinga.com/news/earnings/20/11/18241008/catalent-could-be-a-big-covid-19-vaccine-play-the-thing-behind-the-thing
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