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Here's Why You Should Invest in West Pharmaceutical (WST) Now
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West Pharmaceutical Services, Inc. (WST - Free Report) is well-poised for growth backed by a robust Proprietary Products segment and sustained strength in research and development (R&D).
Shares of the Zacks Rank #2 (Buy) company surged 47.2% compared with the industry’s growth of 18.6% in a year’s time. The S&P 500 Index has rallied 31.1% in the same time frame.
West Pharmaceutical — with a market capitalization of $31.29 billion — is a leading global manufacturer with respect to design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. It anticipates earnings to improve 27.6% over the next five years. The company has a trailing four-quarter earnings surprise 29.4%, on average.
Key Catalysts
Proprietary products business continues to exhibit sustained strength and is an important contributor to West Pharmaceutical’s top-line growth. This segment’s customers primarily comprise several of the major biologic, generic, and pharmaceutical drug companies in the world that incorporate components and other offerings into their injectable products for distribution to patients, who are the end users.
In 2020, net sales at this segment increased 17.9% on a year-over-year basis and the first half of 2021 was no exception. Sales improved 35.7% organically in the third quarter owing to double-digit growth in high-value products (HVP) (which accounted for 70% of sales in the quarter), and strong momentum throughout biologics and pharma market units in the quarter under review.
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Margin expansion in this segment has been encouraging. The third-quarter gross profit margin witnessed an expansion of 550 basis points on a year-over-year basis driven by favorable mix of products sold (stemming from the demand in HVP), production efficiencies and increase in sales price.
West Pharmaceutical maintains its own research-scale production facilities and laboratories for creating new products, and provides contract engineering design and development services to help customers with new product development.
The company continues to pursue innovative strategic platforms in prefillable syringes, injectable containers, advanced injection, and safety and administration systems. In the third quarter of 2021, the company’s R&D expenses rose 4.8% from the prior-year quarter. West Pharmaceutical remains committed toward seeking new innovative opportunities for acquisition, licensing, partnering or development of products, services and technologies. The company is focused on its objective to connect the dots throughout science and technology to fulfil ideas for potential value creation.
Estimates Trend
West Pharmaceutical has been witnessing an upward estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 2.6% to $8.43.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $709.1 million, suggesting growth of 22.2% from the year-ago reported number.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2.
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson’s long-term earnings growth rate is estimated at 8.9%. The company currently carries a Zacks Rank #2.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company’s earnings yield of 9.9% compared to the industry’s 3.2%.
AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #1.
AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%).
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Here's Why You Should Invest in West Pharmaceutical (WST) Now
West Pharmaceutical Services, Inc. (WST - Free Report) is well-poised for growth backed by a robust Proprietary Products segment and sustained strength in research and development (R&D).
Shares of the Zacks Rank #2 (Buy) company surged 47.2% compared with the industry’s growth of 18.6% in a year’s time. The S&P 500 Index has rallied 31.1% in the same time frame.
West Pharmaceutical — with a market capitalization of $31.29 billion — is a leading global manufacturer with respect to design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. It anticipates earnings to improve 27.6% over the next five years. The company has a trailing four-quarter earnings surprise 29.4%, on average.
Key Catalysts
Proprietary products business continues to exhibit sustained strength and is an important contributor to West Pharmaceutical’s top-line growth. This segment’s customers primarily comprise several of the major biologic, generic, and pharmaceutical drug companies in the world that incorporate components and other offerings into their injectable products for distribution to patients, who are the end users.
In 2020, net sales at this segment increased 17.9% on a year-over-year basis and the first half of 2021 was no exception. Sales improved 35.7% organically in the third quarter owing to double-digit growth in high-value products (HVP) (which accounted for 70% of sales in the quarter), and strong momentum throughout biologics and pharma market units in the quarter under review.
Margin expansion in this segment has been encouraging. The third-quarter gross profit margin witnessed an expansion of 550 basis points on a year-over-year basis driven by favorable mix of products sold (stemming from the demand in HVP), production efficiencies and increase in sales price.
West Pharmaceutical maintains its own research-scale production facilities and laboratories for creating new products, and provides contract engineering design and development services to help customers with new product development.
The company continues to pursue innovative strategic platforms in prefillable syringes, injectable containers, advanced injection, and safety and administration systems. In the third quarter of 2021, the company’s R&D expenses rose 4.8% from the prior-year quarter. West Pharmaceutical remains committed toward seeking new innovative opportunities for acquisition, licensing, partnering or development of products, services and technologies. The company is focused on its objective to connect the dots throughout science and technology to fulfil ideas for potential value creation.
Estimates Trend
West Pharmaceutical has been witnessing an upward estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 2.6% to $8.43.
The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $709.1 million, suggesting growth of 22.2% from the year-ago reported number.
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , McKesson Corporation (MCK - Free Report) , and AngioDynamics, Inc. (ANGO - Free Report) . You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company currently carries a Zacks Rank of 2.
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson’s long-term earnings growth rate is estimated at 8.9%. The company currently carries a Zacks Rank #2.
McKesson surpassed earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company’s earnings yield of 9.9% compared to the industry’s 3.2%.
AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company currently carries a Zacks Rank #1.
AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%).