Catalent valuation path increasingly clear, Moderna partnership renewal strategically important – Deutsche Bank

By Sam Boughedda

Catalent (NYSE:) 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 +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:) 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.