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West Pharmaceutical Services, Inc. (WST), with a market cap of $22.7 billion, is a prominent manufacturer in the healthcare industry, focusing on advanced containment and delivery systems for injectable drugs. Based in Exton, Pennsylvania, the company operates globally, serving a wide range of pharmaceutical and medical device companies.
Companies valued at $10 billion or more are generally considered “large-cap” stocks, and West Pharmaceutical fits this criterion perfectly, exceeding the mark. West Pharmaceutical stands out in the market for its extensive expertise in developing custom, high-quality containment and delivery systems that cater to the specific needs of biologics and complex drug formulations.
The medical device company has experienced a 24.8% decline from its 52-week high of $413.70 reached in February. Over the past three months, its shares have dropped 3.4%, contrasting with the 6.9% gains of The Health Care Select Sector SPDR Fund (XLV) during the same period.
In the longer term, WST has shown weak performance with an 11.6% decline on a YTD basis, lagging behind XLV’s 14.3% gains. Moreover, shares of West Pharmaceutical have dipped 20.7% over the past 52 weeks, compared to XLV’s 18.5% gain during the same period.
To confirm the bearish price trend, WST has been trading below its 50-day and 200-day moving averages since late April despite some recent fluctuations.
Shares of West Pharmaceutical tumbled 14.4% on Jul. 25 due to the company cutting its annual profit and sales forecast amid lower demand for its medical equipment, as biotech customers worked through existing inventories. The revised profit outlook for the full year dropped to $6.35 per share–$6.65 per share, significantly missing analyst expectations. Additionally, WST reported weaker-than-expected Q2 EPS of $1.52 and revenue of $702.1 million, reflecting ongoing challenges with customer destocking and decreased orders.
Its rival, Thermo Fisher Scientific Inc. (TMO), has gained 21.9% over the past 52 weeks and is up 16.9% on a YTD basis, which outpaced West Pharmaceutical's stock performance.
Despite its weak price performance, analysts are optimistic about West Pharmaceutical. With a consensus rating of "Strong Buy" from eight analysts, the mean price target of $361.25 suggests a potential premium of 16.1% over its current trading levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
