West Pharmaceutical Earnings: 2024 Revenue Guidance Disappoints; Wide Moat Intact, Valuation Raised

West’s fourth-quarter earnings were in line with expectations, but 2024 guidance disappointed due to revenue growth forecasts that were about 6-7 percentage points lower than our expectations. However, we believe the headwinds that management highlighted are likely to be transitory. We have also reviewed our thoughts on the company and reaffirm our wide moat rating thanks to its very strong intangibles and switching costs. We have revised our fair value estimate upward to $336 per share from $290 primarily to reflect updated assumptions on long-term growth. After the recent selloff, we view shares as only slightly above our fair value and think the long-term story remains intact, despite the headwinds in 2024.