KeyBanc Upgrades Catalent On Industry Transformation

Catalent Inc CTLT is a “key component” of the transformation of the health care industry from pharma to biopharma, according to KeyBanc Capital Markets.

The Catalent Analyst: Paul Knight upgraded Catalent from Sector Weight to Overweight with a $120 price target. 

The Catalent Thesis: An accelerating number of biotech therapies are being approved by the FDA, easily doubling the pace seen in 2000-2010, Knight said in an upgrade note.

Amid this trend, contract development and manufacturing organizations “have become of increasing strategic importance to biopharma as companies rationalize their supply chain and molecules become increasingly complex to develop and manufacture” the analyst said. 

Catalent's biologic capabilities previously lacked an integrated offering and scale, he said.

“The acquisition of Cook Pharmica in 2017 brought increased scale and technological capability into CTLT's network. Further with 1,109 CGT Clinical Trials ongoing and 5 approved by the FDA, CTLT gained exposure to this end market with acquisitions Paragon Bioservices, and MasTHerCell,” Knight said.   

“Management's recent organic and inorganic investments lead us to believe that its long-term outlook of 6-8% is not only achievable but conservative.” 

CTLT Price Action: Shares of Catalent were up 4% at $96.01 at last check Thursday.