Institutions have increased their shares in this biotech company, adding another 14.8 million shares recently.
Catalent, Inc (CTLT)
From Weiss Stock Ratings Heat Maps
Our model is known to find names that don’t always get the media spotlight—it just crunches the numbers independently of any biases and lets us know which stocks are worth taking a look at for our portfolios.
Today’s under the radar name is Catalent, Inc (CTLT, Rated B-) which currently shows up at the top of our Best Growth Stocks HeatMap. It’s a $3 billion company in the Healthcare, Biotech space that provides advanced delivery technologies and development solutions for drugs, biologics, and consumer health products worldwide. It operates through three segments: Oral Technologies, Medication Delivery Solutions, and Development & Clinical Services.
It’s a relatively newer company, and despite being a biotech, it’s actually profitable. In the last quarter, its sales in Oral Tech, Medication Delivery Solutions, and Development and Clinical Services increased by 7%, 5%, and 23% respectively, in constant currency terms (it’s globally oriented and does business in the UK, USA, France and Germany). Its profit increased by 50% thanks to lower debt interest payments and the company generated $130.7 million in free cash flow over the last 12 months.
And the stock is still cheap. It trades at 13.7x forward expectations, unusually low for a biotech company and well below the 18x of the overall market. And analysts are split; Raymond James recently downgraded the stock, while JPMorgan reiterated their ‘Buy’ rating and $32.00 price target. On average, analysts expect the stock to reach $30.50 in the next 12 months.
We’re not saying you should consider buying hand over fist, the stock can be volatile—but from a fundamental perspective, the company is doing what it is supposed to, and with the recent price weakness and valuation argument, this stock could be ripe for an upside move if sentiment improves.
Mike Burnick, Weiss Stock Ratings Heat Maps, published by Money and Markets, a Division of Weiss Research, Inc., www.weissresearchissues.com/weiss-stock-ratings-heat-maps, 1-800-291-8545, December 30, 2015