Reasons for the Decline of Catalent (CTLT) Stock

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Artisan Partners, an investment management company, released its “Artisan Mid Cap Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, its Investor Class fund ARTMX returned -1.13%, Advisor Class fund APDMX posted a return of -1.12%, and Institutional Class fund APHMX returned -1.07%, compared to a return of 6.90% for the Russell Midcap Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Artisan Partners highlighted stocks like Catalent, Inc. (NYSE:CTLT) in the fourth quarter 2022 investor letter. Headquartered in  Somerset, New Jersey, Catalent, Inc. (NYSE:CTLT) is a drug, protein-based biologics, cell, and gene therapies manufacturer. On January 19, 2023, Catalent, Inc. (NYSE:CTLT) stock closed at $49.29 per share. One-month return of Catalent, Inc. (NYSE:CTLT) was 13.70%, and its shares lost 51.71% of their value over the last 52 weeks. Catalent, Inc. (NYSE:CTLT) has a market capitalization of $8.87 billion.

Artisan Partners made the following comment about Catalent, Inc. (NYSE:CTLT) in its Q4 2022 investor letter:

Catalent, Inc. (NYSE:CTLT) underperformed meaningfully in the quarter based on disappointing earnings results and a fiscal 2023 outlook reduction. There are several issues impacting revenue and margins. The company is grappling with declining COVID vaccine revenues, while other customers who were concerned about supply chain shortages during the pandemic are now reducing safety stock inventories. Despite this bad news, Catalent’s underlying biologics manufacturing growth remains quite strong, and the second half of its fiscal year should improve based on new program wins and the potential FDA approval of a major gene therapy product. The company is also rightsizing costs to adapt to the lower level of near-term revenue, which should help to boost margins. We’re disappointed and monitoring our thesis carefully but continue to view the company’s long-term prospects as solid. The company’s recent misfortunes have driven the stock’s valuation to levels well below peers and past M&A transactions in this sector, which could present an opportunity once the profit cycle resumes. We would note that several other health care holdings (West Pharmaceuticals, Repligen) are also experiencing COVID vaccine “hangovers” due to the lower-than-expected uptake of booster shots. While this is weighing on the portfolio’s short-term performance, our longer term vaccine estimates were already quite modest, and we look forward to reaccelerating growth later this year as the tough vaccine comparisons ease.”

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Catalent, Inc. (NYSE:CTLT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Catalent, Inc. (NYSE:CTLT) at the end of the third quarter, which was 41 in the previous quarter.

We discussed Catalent, Inc. (NYSE:CTLT) in another article and shared TimesSquare Capital’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.