BofA analysts downgraded Catalent (NYSE:CTLT) to Underperform from Neutral, cutting the firm's price target on the stock to $28 from $49 per share in a note.
The analysts told investors that the firm has decided to downgrade the stock due to limited near-term visibility, with Catalent having announced on Monday that it was delaying the reporting of its F3Q results, which were initially planned for May 9 but are now scheduled for May 15.
In reaction to the news, in which Catalent also slashed guidance, the company's shares plunged over 25%.
Premarket Tuesday, it is trading at $35.58, up just 0.3%.
"While CTLT had previously said they were cutting their FY23 outlook due to productivity issues and remediation costs, this morning’s release quantified the size of the hit as greater than $400mn to both sales (implies $4.75bn midpoint, or lower) and Adj EBITDA (implies $820mn to $900mn, or lower)," the analysts wrote. "Given CTLT is on a June FY (and FY23 is almost over), this is a much steeper cut than what had been anticipated and raises even more questions about the nature of the productivity/operational issues that CTLT is facing."
They added that the "troubling developments" follow the company’s mid-April profit warning and CFO departure.
"With mounting operational and forecasting issues, visibility into forward estimates is severely limited, and we see shares likely underperforming until these challenges are resolved, and investor confidence is restored," said the analysts.