By Sam Boughedda
Catalent (NYSE:CTLT) was upgraded to Buy with its price target raised to $88 from $79 at Deutsche Bank on Monday.
The analysts there believe Catalent's valuation path is increasingly clear, with the firm now having even more conviction in its 2023/2024 estimates. They also see a "diminishing tail risk due to strengthening strategic partnerships and increased management accountability and ownership."
"We acknowledge the stock's outperformance +44% vs the S&P 500 +7% ytd; however, we still see a 2.5-to-1 positive risk/reward skew for the stock under and FDA approval for SRP-9001; or, at least 4-to-1 based on an acquisition by a suitor (as reported by Bloomberg)," wrote the analysts.
They pointed to the Moderna (NASDAQ:MRNA) partnership renewal and expansion as a strategically important win for Catalent, diminishing investor concerns around terminal value due to a weakened market positioning.
"From a numbers perspective, we believe our current $300m in C19/respiratory revenue from this customer in FY2024 is a conservative floor. Further, recent positive FDA inspections at two of Catalent's sites for the commercial launch of SRP-9001 also address recent quality concerns," the analysts added.