West Pharmaceutical Services, Inc. (WST - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.83, up 3.4% year over year. The figure also beat the Zacks Consensus Estimate by 2.8%.
The adjustments include expenses related to the amortization of acquisition-related intangible assets.
GAAP EPS for the quarter was $1.83, up 34.6% year over year.
The company’s shares have risen 27.7% in the past year compared with the industry’s growth of 9.5%. The broader S&P 500 Index has increased 22.6% in the same time frame.
Revenues in Detail
West Pharmaceutical registered net sales of $732 million in the fourth quarter, up 3.3% year over year. The figure, however, missed the Zacks Consensus Estimate by 0.9 %.
The company recorded organic net sales growth of 1.4% in the reported quarter.
Per management, the top-line growth was driven by Proprietary Products' high-value product (HVP) and strong Contract Manufacturing component sales. However, WST’s revenues reflect a lower pandemic-related sales.
Segmental Details
West Pharmaceutical operates under two segments — Proprietary Products and Contract-Manufactured Products.
Net sales in the Proprietary Products segment were $593.7 million, indicating year-over-year growth of 1.5% reportedly but down 0.3% organically. HVP net sales accounted for approximately 75% of the segment’s net sales, with a strong demand for NovaPure and HVP devices like self-injection and administration systems.
The Pharma market units of the Proprietary Products segment reflected weak organic growth in the fourth quarter. The declining sales related to COVID-19 vaccines led to a decline in organic net sales for the Biologics and Generic market unit. Excluding COVID-19-related sales, the Proprietary Products segment had high single-digit organic net sales growth.
Net sales in the Contract-Manufactured Products segment increased 11.6% year over year to $138.3 million. Currency translation was a tailwind, boosting sales growth by 220 basis points. The segment saw a 9.4% improvement in organic net sales.
Margins
In the quarter under review, West Pharmaceutical’s gross profit increased 6.1% to $278.2 million. The gross margin expanded nearly 100 basis points (bps) to 38%.
Selling, general and administrative expenses rose 5% to $90 million. Research and development expenses went up 15.7% year over year to $18.4 million.
Adjusted operating profit totaled $159.9 million, indicating an increase of 0.8% from the prior-year quarter’s level. The adjusted operating margin contracted 60 bps to 21.8%.
Financial Position
West Pharmaceutical exited fourth-quarter 2023 with cash and cash equivalents of $853.9 million compared with $898.6 million at the end of the third quarter. Total debt at the end of the reported quarter was $206.8 million compared with $207.3 million at the end of the previous quarter.
Cumulative net cash flow from operating activities was $537.4 million compared with $493.2 million in the year-ago period.
2024 Guidance
WST issued its 2024 outlook for earnings and revenues.
It projects adjusted EPS in the range of $7.50-$7.75 for full-year 2024. The Zacks Consensus Estimate for the same is pegged at $8.79.
Net sales are projected between $3 billion and $3.025 billion. The Zacks Consensus Estimate for the same is pegged at $3.21 billion. The company expects currency translation to have a positive impact of $8 million on revenues. The organic sales growth estimate was 2-3%.
Our Take
West Pharmaceutical exited the fourth quarter of 2023 with mixed results. The recovery in organic growth is encouraging. However, lower COVID-related sales continue to hurt the top line. The company’s lower-than-market revenue outlook reflects the same. Moreover, contractions in the operating margin do not bode well.
On a positive note, demand for West Pharmaceutical’s HVP products continued to be strong. Strong organic net sales growth in the Pharma, Biologics and Generic market units, excluding COVID-related slaes, is another quarterly highlight.
Zacks Rank and Stocks to Consider
Currently, West Pharmaceutical carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Cardinal Health (CAH - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’ shares have risen 11.9% in the past year compared with the industry’s 17.3% growth.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 44.3% in the past year compared with the industry’s 4.6% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.3%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.64%.
Cardinal Health’s shares have risen 32.2% in the past year compared with the industry’s growth of 9.4%.
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West Pharmaceutical Services, Inc. (WST - Free Report) reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.83, up 3.4% year over year. The figure also beat the Zacks Consensus Estimate by 2.8%.
The adjustments include expenses related to the amortization of acquisition-related intangible assets.
GAAP EPS for the quarter was $1.83, up 34.6% year over year.
The company’s shares have risen 27.7% in the past year compared with the industry’s growth of 9.5%. The broader S&P 500 Index has increased 22.6% in the same time frame.
Revenues in Detail
West Pharmaceutical registered net sales of $732 million in the fourth quarter, up 3.3% year over year. The figure, however, missed the Zacks Consensus Estimate by 0.9 %.
The company recorded organic net sales growth of 1.4% in the reported quarter.
Per management, the top-line growth was driven by Proprietary Products' high-value product (HVP) and strong Contract Manufacturing component sales. However, WST’s revenues reflect a lower pandemic-related sales.
Segmental Details
West Pharmaceutical operates under two segments — Proprietary Products and Contract-Manufactured Products.
Net sales in the Proprietary Products segment were $593.7 million, indicating year-over-year growth of 1.5% reportedly but down 0.3% organically. HVP net sales accounted for approximately 75% of the segment’s net sales, with a strong demand for NovaPure and HVP devices like self-injection and administration systems.
The Pharma market units of the Proprietary Products segment reflected weak organic growth in the fourth quarter. The declining sales related to COVID-19 vaccines led to a decline in organic net sales for the Biologics and Generic market unit. Excluding COVID-19-related sales, the Proprietary Products segment had high single-digit organic net sales growth.
Net sales in the Contract-Manufactured Products segment increased 11.6% year over year to $138.3 million. Currency translation was a tailwind, boosting sales growth by 220 basis points. The segment saw a 9.4% improvement in organic net sales.
Margins
In the quarter under review, West Pharmaceutical’s gross profit increased 6.1% to $278.2 million. The gross margin expanded nearly 100 basis points (bps) to 38%.
Selling, general and administrative expenses rose 5% to $90 million. Research and development expenses went up 15.7% year over year to $18.4 million.
Adjusted operating profit totaled $159.9 million, indicating an increase of 0.8% from the prior-year quarter’s level. The adjusted operating margin contracted 60 bps to 21.8%.
Financial Position
West Pharmaceutical exited fourth-quarter 2023 with cash and cash equivalents of $853.9 million compared with $898.6 million at the end of the third quarter. Total debt at the end of the reported quarter was $206.8 million compared with $207.3 million at the end of the previous quarter.
Cumulative net cash flow from operating activities was $537.4 million compared with $493.2 million in the year-ago period.
2024 Guidance
WST issued its 2024 outlook for earnings and revenues.
It projects adjusted EPS in the range of $7.50-$7.75 for full-year 2024. The Zacks Consensus Estimate for the same is pegged at $8.79.
Net sales are projected between $3 billion and $3.025 billion. The Zacks Consensus Estimate for the same is pegged at $3.21 billion. The company expects currency translation to have a positive impact of $8 million on revenues. The organic sales growth estimate was 2-3%.
Our Take
West Pharmaceutical exited the fourth quarter of 2023 with mixed results. The recovery in organic growth is encouraging. However, lower COVID-related sales continue to hurt the top line. The company’s lower-than-market revenue outlook reflects the same. Moreover, contractions in the operating margin do not bode well.
On a positive note, demand for West Pharmaceutical’s HVP products continued to be strong. Strong organic net sales growth in the Pharma, Biologics and Generic market units, excluding COVID-related slaes, is another quarterly highlight.
Zacks Rank and Stocks to Consider
Currently, West Pharmaceutical carries a Zacks Rank #3 (Hold).
Some other top-ranked stocks in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Cardinal Health (CAH - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’ shares have risen 11.9% in the past year compared with the industry’s 17.3% growth.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 44.3% in the past year compared with the industry’s 4.6% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.3%. CAH’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.64%.
Cardinal Health’s shares have risen 32.2% in the past year compared with the industry’s growth of 9.4%.
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From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
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