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West Pharmaceutical Services Inc WST

Morningstar Rating
$357.31 −0.98 (0.27%)
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Company Report

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.

Price vs Fair Value

WST is trading at a 6% premium.
Price
$357.31
Fair Value
$863.00
Uncertainty
Medium
1-Star Price
$443.90
5-Star Price
$983.70
Economic Moat
Xqyw
Capital Allocation
Xnvxtdlq

Bulls Say, Bears Say

Bulls

West’s top-line growth is likely to be buoyed by secular trends in injectable drugs, especially increasing use of biologic drugs.

Bears

Many of West’s products and services could be insourced by customers, and a reversal of higher outsourcing could occur if customers decide they want more control over the supply chain.

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News

Trading Information

Previous Close Price
$358.29
Day Range
$352.65359.95
52-Week Range
$309.43415.73
Bid/Ask
$346.84 / $367.32
Market Cap
$26.19 Bil
Volume/Avg
423,001 / 526,856

Key Statistics

Price/Earnings (Normalized)
44.67
Price/Sales
9.15
Dividend Yield (Trailing)
0.22%
Dividend Yield (Forward)
0.22%
Total Yield
1.94%

Company Profile

West Pharmaceutical Services is based in Pennsylvania, U.S., and is a key supplier to firms in the pharmaceutical, biotechnology, and generic drug industries. West sells elastomer-based packaging components (including stoppers, seals, and plungers), non-glass containment solutions, and auto-injectors for injectable drugs. The company reports in two segments: proprietary products (about 80% of total revenue) and contract-manufactured products (about 20% of total revenue). It generates approximately 55% of its revenue from international markets and 45% from the United States.
Sector
Healthcare
Industry
Medical Instruments & Supplies
Stock Style Box
Mid Growth
Total Number of Employees
10,600

Competitors

Valuation

Metric
WST
PODD
BDX
Price/Earnings (Normalized)
44.6789.1020.06
Price/Book Value
9.1415.902.73
Price/Sales
9.157.233.56
Price/Cash Flow
33.8636.4821.28
Price/Earnings
WST
PODD
BDX

Financial Strength

Metric
WST
PODD
BDX
Quick Ratio
2.032.360.46
Current Ratio
2.883.511.08
Interest Coverage
75.446.144.17
Quick Ratio
WST
PODD
BDX

Profitability

Metric
WST
PODD
BDX
Return on Assets (Normalized)
16.37%8.02%3.40%
Return on Equity (Normalized)
21.81%33.45%7.05%
Return on Invested Capital (Normalized)
19.11%10.07%5.04%
Return on Assets
WST
PODD
BDX
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