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 $22.9 billion, West Pharmaceutical’s operations span the Americas, Europe, the Middle East, Africa, and the Indo-Pacific.
The contract manufacturer has substantially lagged behind the broader market over the past year. WST has plunged 10.1% on a YTD basis and 9.9% over the past year compared to the S&P 500 Index’s ($SPX) 25.2% gains in 2024 and 31% returns over the past year.
Narrowing the focus, WST has also underperformed the First Trust Indxx Global Medical Devices ETF’s (MDEV) 4.5% gains on a YTD basis and 14.3% returns over the past year.
West Pharmaceutical had a tough start to the year. Its stock prices plummeted 14.1% after the release of its FY 2023 earnings on Feb.15 as the company gave a disappointing full-year topline and earnings guidance for 2024. The company forecasted its full-year net sales to reach approximately $3 billion, representing a 1.7% growth from $2.95 billion net sales reported in FY 2023. Moreover, its adjusted EPS guidance range of $7.50 to $7.75 for 2024 represented a decline in expected earnings from $8.08 adjusted EPS in 2023, unsettling investor confidence.
However, more recently WST stock prices surged 15.4% on Oct. 24 following the release of its better-than-expected Q3 earnings. Due to lower sales volumes of NovaBrand products and FluroTec, Westar, and NovaPure products, WST’s Generics market unit and Biologics market units observed a drop in net sales leading to an overall decline in sales and earnings. The company’s Q3 net sales observed a marginal decline to $746.9 million while its adjusted net income plunged 16.2% year-over-year to $136.1 million. Nevertheless, its adjusted EPS of $1.85 exceeded analysts’ consensus estimates by a staggering 22.5%, leading to a positive momentum in stock prices.
For the current fiscal year, ending in December, analysts expect WST to report a 17.5% year-over-year drop in adjusted EPS to $6.67. The company’s earnings surprise history is mixed. It surpassed analysts’ bottom-line estimates thrice over the past four quarters while missing on another occasion.
WST stock has a consensus “Strong Buy” rating overall. Among the eight analysts covering the stock six recommend “Strong Buy,” and two advise a “Hold” rating.
This configuration has been consistent over the past months.
On Nov. 20, Jefferies analyst David Windley maintained a “Buy” rating with a price target of $393, indicating an upside potential of 24.1% to current price levels.
WST’s mean price target of $366 represents a premium of 15.6% to current price levels. Meanwhile, the Street-high target of $470 suggests a massive upside potential of 48.5%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart- Is Micron Stock a Buy Before 2024 Ends?
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