Catalent (CTLT) has played an outsized role in the race to produce Covid vaccines. It’s a contract manufacturer that helps pharmaceutical customers develop biologic drugs and gene therapies, notes Mike Cintolo, growth stock expert and editor of Cabot Top Ten Trader.

The company is involved with small-volume clinical trials to large-volume commercial sales, and has deals with giants Johnson & Johnson (JNJ) and Moderna (MRNA) to produce vaccines.

Catalent is well equipped for its pandemic role: As one of the world’s largest drug manufacturers, it makes 73 billion doses of drug and health products annually, with 83 of the world’s top 100 drug companies as its customers.

Catalent spent much of last year scaling its capacity to meet the massive demand for the production of Covid vaccines and treatments (it’s on track to deliver well over a billion vaccine doses this year) while also continuing to manufacture a broad range of other medicines (including 139 products in its development pipeline).

This demand was highlighted in fiscal Q4, in which revenue lifted 26% to $1.2 billion, while per-share earnings jumped 29% to $1.16. Adjusted EBITDA came in at record levels, driven by “robust growth” in its biologics segment, which accounted for 48% of net sales.

Catalent has also been on an acquisition spree of late, buying Juniper Pharmaceuticals, Paragon Bioservices and MaSTherCell in a bid to cement its position as a leading biologics and gene therapy manufacturer. Most recently, it acquired Bettera Holdings to expand its manufacturing capabilities for vitamins and supplements (by making them in gummy form).

Moving forward, management guided for full-year fiscal 2022 (started in July) revenue of $4.4 billion at the midpoint (up 12% from the prior year) and expects continued growth from work on newer gene-based Covid vaccines.

Technically, the stock enjoyed a solid advance for most of last year and early this year, but peaked in February with many names in the broad market.

The correction wasn’t particularly fierce (23% from high to low), but it did take until late August for a fresh breakout to occur, with CTLT moving to new price (though not RP) highs on two straight weeks of good volume. The pullback since then has been relatively tame, and a bit more weakness could offer up a nice entry point.

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