We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
West Pharmaceutical (WST) Beats on Q4 Earnings, HVP Drives Sales
Read MoreHide Full Article
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.
Image Source: Zacks Investment Research
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.
West Pharmaceutical Services, Inc. Price, Consensus and EPS Surprise
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%.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
West Pharmaceutical (WST) Beats on Q4 Earnings, HVP Drives Sales
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.
Image Source: Zacks Investment Research
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.
West Pharmaceutical Services, Inc. Price, Consensus and EPS Surprise
West Pharmaceutical Services, Inc. price-consensus-eps-surprise-chart | West Pharmaceutical Services, Inc. Quote
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%.