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Exton, Pennsylvania-based West Pharmaceutical Services, Inc. (WST) designs, manufactures and sells containment and delivery systems for injectable drugs and healthcare products. With a market cap of $24.4 billion, West Pharmaceutical’s operations span the Americas, Europe, the Middle East, Africa, and the Indo-Pacific. WST is expected to announce its fourth-quarter results on Thursday, Feb. 20.
Ahead of the event, analysts expect West Pharmaceutical to report a non-GAAP profit of $1.75 per share, down 4.4% from $1.83 per share reported in the year-ago quarter. While the company has surpassed analysts’ bottom-line estimates thrice over the past four quarters, it has missed the estimates on one other occasion. Its adjusted EPS for the last reported quarter dropped 14.4% year-over-year to $1.85 but surpassed the consensus estimates by a notable 22.5%.
For the full fiscal 2024, WST is expected to deliver an adjusted EPS of $6.67, down 17.5% from $8.08 in fiscal 2023. While in fiscal 2025, its earnings are expected to rebound 12.7% year-over-year to $7.52 per share.
WST stock has observed a marginal gain of 57 basis points over the past 52 weeks, lagging behind the Healthcare Select Sector SPDR Fund’s (XLV) 2.2% returns and the S&P 500 Index’s ($SPX) 25% surge during the same time frame.
West Pharmaceutical faced a challenging start to the year, with its stock prices plummeting 14.1% after releasing its FY 2023 results on Feb.15. The company issued a disappointing full-year topline and earnings guidance for 2024, projecting full-year net sales to reach approximately $3 billion, a modest increase from the $2.95 billion reported in FY 2023. Additionally, its adjusted EPS guidance range of $7.50 to $7.75 for 2024 indicated a continued decline in earnings from $8.08 in 2023, which shook investors' confidence.
However, WST stock prices rebounded significantly, surging over 15.4% on Oct. 24 following the release of its Q3 earnings, which surpassed Wall Street's expectations by a notable margin. Despite this, the overall net sales experienced a slight decline to $746.9 million due to lower volumes in Generics and Biologics market units. Moreover, its adjusted net income fell 16.2% year-over-year to $136.1 million.
Nonetheless, analysts remain strongly bullish on the stock’s prospects. WST has a consensus “Strong Buy” rating overall. Among the 10 analysts covering the stock, eight recommend “Strong Buy” and two suggest a “Hold” rating. Its mean price target of $379.22 represents a 10% premium to current price levels.
