West Pharmaceutical Services, a global provider of solutions for drugs, biologics, gene therapies, and consumer healthcare products, recently announced its Q4 results, surpassing analysts’ expectations for both revenue and earnings. The company reported sales of $749 million and adjusted earnings per share of $1.82, compared to $740 million and $1.73, respectively. However, its future guidance fell short of market expectations, leading to a decline in its stock price after the announcement. Separately, with uncertainty surrounding the company, see What’s Next For U.S. Steel Stock After A Mixed Q4?
WST stock has dropped 43% since the start of 2024, significantly underperforming the S&P 500 index, which has gained 28% over the same period. Weakness in its generics and biologics segments has weighed on its share price recently. If you’re looking for a less volatile investment option, consider the High-Quality Portfolio, which has outperformed the S&P 500, delivering over 91% returns since its inception.
West Pharmaceutical Services’ revenue for Q4 reached $749 million, reflecting a 2.3% year-over-year increase. The company’s proprietary products sales grew by 3.4%, while contract-manufactured products sales declined by 2.5%. The drop in CMP sales was attributed to reduced demand for healthcare diagnostic devices, whereas PPS sales benefited from increased adoption of self-injection device platforms.
Additionally, the company experienced a 150 basis point reduction in its gross profit margin to 36.5%, alongside a slight 10 basis point drop in its operating margin to 21.7%. This impacted earnings, which came in at $1.82 per share compared to $1.83 in the prior-year quarter. Looking ahead, West Pharmaceutical projects sales of $2.89 billion and adjusted earnings of $6.10 per share for 2025, falling short of market expectations of $3.04 billion and $7.44, respectively.
Following the earnings announcement, WST stock plummeted 38% due to its disappointing guidance. Over a broader timeframe, its stock performance has been volatile, with annual returns of 66% in 2021, -50% in 2022, 50% in 2023, and -7% in 2024.
By comparison, the Trefis High-Quality Portfolio, consisting of 30 stocks, has exhibited significantly lower volatility while consistently outperforming the S&P 500 over the past four years. Why is that? HQ Portfolio stocks have delivered better returns with reduced risk compared to the broader market, as demonstrated by the HQ Portfolio performance metrics.
Given the prevailing macroeconomic uncertainty, including potential interest rate cuts and ongoing trade tensions, will WST stock repeat its struggles from 2022 and 2024, or will it stage a recovery over the next year? After its recent decline, we believe WST stock is currently undervalued. Why?
At its present level of around $200, WST stock is trading at just 5.1x trailing revenue, compared to its five-year average price-to-sales ratio of 9.2x. While lower profit margins and cautious guidance justify some valuation compression, we believe the stock is oversold at current levels, presenting a compelling investment opportunity. Separately, after a rally, should you Buy, Sell, Or Hold HIMS Stock At $60?
While WST stock appears undervalued, it’s useful to analyze how West Pharmaceutical Services’ Peers compare on key metrics. You can explore further industry-wide comparisons at Peer Comparisons.
Invest with Trefis Market-Beating Portfolios.
See all Trefis Price Estimates.