West Pharmaceutical Services, Inc. ( WST Quick Quote WST - Free Report) reached a new 52-week high of $365.98 on Jul 2, before closing the session marginally lower at $365.74.
Shares of the company have gained 58.5% in the past year compared with the
industry’s 29.5% growth and the S&P 500's 40.1% rise.
The company is witnessing an upward trend in its stock price, prompted by its robust proprietary products business. West Pharmaceutical’s solid performance in the first quarter of 2021 and its successful implementation of pandemic initiatives also buoy optimism. However, information security breaches and foreign exchange fluctuations are major downsides.
Image Source: Zacks Investment Research
Let's delve deeper.
Key Growth Drivers Robust Proprietary Products Segment: West Pharmaceutical’s proprietary products business, which continues to exhibit sustained strength and is an important contributor to the company’s top line, is raising market sentiments. In the first quarter of 2021, net sales at this segment recorded a solid uptick, where high-value products (“HVP”) represented a larger share of segmental sales and generated double-digit organic sales growth, led by strong customer demand. Successful Implementation of Pandemic Initiatives: West Pharmaceutical’s efforts to maintain customers’ trust in the company raise optimism. Apart from ensuring the well being and safety of team members worldwide, the company successfully continued the manufacturing and supply of components to its customers. West Pharmaceutical also enabled vaccine makers to protect their sensitive biomolecules with trusted solutions. Expansion to existing sites was made and personnel were deployed to cater to the anticipated demand for the pandemic-related components. Strong Q1 Results: West Pharmaceutical’s better-than-expected results in first-quarter 2021 buoy optimism. The company continues to gain from both its segments – Proprietary Products and Contract-Manufactured Products – which have been contributing to the top line for quite some time. Expansion in both margins is a positive. Further, the company’s HVPs continue to drive higher margins. Additionally, it continues to see strong uptake of HVP components, which include Westar, FluroTec, Envision and NovaPure offerings, along with Daikyo’s Crystal Zenith. A raised 2021 outlook is also encouraging. Downsides Information Security Breaches: West Pharmaceutical’s systems and networks, along with those of its customers, suppliers, service providers and banks, have and might become the target of cyberattacks and information security breaches in future. Failure to comply with regulations or prevent the unauthorized access, release and/or corruption of the company’s or its customers’ confidential information can result in financial losses and also hurt its reputation. Forex Woes: West Pharmaceutical’s business is exposed to foreign currency exchange rate fluctuations. It is expected that sales from international operations will continue to account for a substantial portion of the company’s total sales in future. West Pharmaceutical also incurs currency transaction risks when the company itself, or one of its subsidiaries, enters into a purchase or sales transaction in a currency other than that entity’s local currency. Zacks Rank & Other Key Picks
Currently, West Pharmaceutical carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks from the broader medical space are
Veeva Systems Inc. ( VEEV Quick Quote VEEV - Free Report) , AMN Healthcare Services Inc ( AMN Quick Quote AMN - Free Report) and National Vision Holdings, Inc. ( EYE Quick Quote EYE - Free Report) .
Veeva Systems’ long-term earnings growth rate is estimated at 15.8%. The company presently carries a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare’s long-term earnings growth rate is estimated at 6.5%. It currently flaunts a Zacks Rank #1.
National Vision’s long-term earnings growth rate is estimated at 23%. It currently sports a Zacks Rank #1.
Zacks Names “Single Best Pick to Double”
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.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>