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1. Company Snapshot

1.a. Company Description

West Pharmaceutical Services, Inc.designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.It operates in two segments, Proprietary Products and Contract-Manufactured Products.


The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, washing, and vision inspection and sterilization processes and services to enhance the quality of packaging components.It also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices, as well as a range of integrated solutions, including analytical lab services, pre-approval primary packaging support and engineering development, regulatory expertise, and after-sales technical support.This segment serves biologic, generic, and pharmaceutical drug companies.


The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products.It serves pharmaceutical, diagnostic, and medical device companies.The company distributes its products through its sales force and distribution network, as well as contract sales agents and regional distributors.


West Pharmaceutical Services, Inc.was incorporated in 1923 and is headquartered in Exton, Pennsylvania.

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1.b. Last Insights on WST

West Pharmaceutical Services, Inc.'s recent performance was driven by strong Q3 earnings, beating estimates with $1.96 per share, and a raised EPS outlook. Robust demand, FX tailwinds, and growth in Proprietary Products, particularly high-value product (HVP) components, fueled the company's growth. Increased institutional investor holdings, including Artisan Partners' 3.3% stake increase and Alberta Investment Management Corp's new 19,000-share stake, underscore confidence in the company's prospects. A "Buy" rating from analysts, citing a strong long-term growth outlook, further supports the stock.

1.c. Company Highlights

2. West's Q3 2025 Earnings: A Strong Performance

West's third-quarter 2025 earnings report revealed a robust financial performance, with revenues reaching $805 million, up 5% on an organic basis. The adjusted operating margins were 21.1%, and adjusted EPS of $1.96 was up 6% compared to the prior year, beating analyst estimates of $1.67. The Proprietary Products segment was the standout, driven by HVP components, with revenues of $648 million, up 5.1% on an organic basis. As Eric Green, CEO, noted, "We're pleased with the performance of both the proprietary products and contract manufacturing segments, along with the trends we're seeing in our business and in the markets."

Publication Date: Oct -27

📋 Highlights
  • Revenues and EPS Growth:: Q3 revenues reached $805 million (+5% organic), adjusted EPS at $1.96 (+6% YoY).
  • HVP Components Outperformance:: Proprietary segment revenue hit $648 million (+5.1% organic), HVP components grew 13.3% driven by GLP-1s and biologics.
  • Full-Year Guidance Raised:: Revenue now expected at $3.06–3.07 billion (+5.8–6.1% YoY), adjusted EPS at $7.06–7.11 (+4.6–5.3% YoY).
  • Gross Margin Expansion:: Q3 margin at 36.6% (+120 bps YoY) due to HVP mix and supply chain efficiency.
  • 2026 Strategic Focus:: GLP-1s and Annex 1 conversions to drive double-digit HVP growth, with plans to replace expiring CGM contract with higher-margin business.

Segment Performance

The Proprietary Products segment's strong performance was driven by robust growth in GLP-1s, HVP upgrades, including Annex 1, and improving performance in biologics. The Contract Manufacturing segment delivered $157 million, growing 4.9% on an organic basis. The company's gross margin was 36.6% in the quarter, up 120 basis points compared to the prior year, due to the positive mix of HVP components and good execution in the supply network.

Guidance and Outlook

West is increasing its full-year guidance on both revenue and earnings per share. For the full year, the company is now anticipating reported revenue to be in the range of $3.06 billion to $3.07 billion, representing reported growth of 5.8% to 6.1% and organic growth of 3.75% to 4%. The adjusted EPS range is now $7.06 to $7.11, representing year-over-year growth of 4.6% to 5.3%. The company is expecting 2026 to be a good year, with destocking largely behind them and demand continuing to improve for their key growth drivers.

Valuation

With a P/E Ratio of 43.74 and an EV/EBITDA of 27.35, the market is pricing in a significant growth premium. However, the company's strong track record of delivering on its growth drivers, including HVP components and biologics, suggests that the premium may be justified. Analysts estimate next year's revenue growth at 6.4%, which is slightly higher than the company's current guidance. The company's ROE of 17.33% and ROIC of 14.25% also indicate a strong ability to generate returns on capital.

Key Drivers

The company's key drivers, including GLP-1s and Annex 1, are expected to continue driving growth. Eric Green noted that the updates earlier this year have been a catalyst for some of the acceleration they're seeing in Annex 1. The company's focus on high-value product components and its ability to respond to the evolving needs of its customers position it well for long-term growth.

3. NewsRoom

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West Pharmaceutical Services, Inc. (WST) Presents at Citi Annual Global Healthcare Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

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30% of the S&P 500 Is Mag 7 Tech Stocks, but This ETF Refuses to Own a Single One

Dec -02

Source: 247wallst.com

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West Pharmaceutical: Back To Growth

Dec -01

Source: seekingalpha.com

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West Pharmaceutical Services, Inc. $WST Shares Acquired by Coldstream Capital Management Inc.

Nov -28

Source: defenseworld.net

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West Pharmaceutical Services, Inc. (WST) Presents at Stephens Annual Investment Conference 2025 Transcript

Nov -20

Source: seekingalpha.com

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Artisan Partners Limited Partnership Grows Stock Holdings in West Pharmaceutical Services, Inc. $WST

Nov -20

Source: defenseworld.net

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West Pharmaceutical Services, Inc. (WST) Presents at Jefferies London Healthcare Conference 2025 Transcript

Nov -18

Source: seekingalpha.com

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West Pharmaceutical Services, Inc. $WST Shares Sold by Candriam S.C.A.

Nov -18

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.37%)

6. Segments

Proprietary Products

Expected Growth: 5%

West Pharmaceutical Services, Inc.'s proprietary products growth is driven by increasing demand for high-value injectable drugs, growing adoption of self-administered injectable devices, and expansion into emerging markets. Additionally, the company's innovative product portfolio, including Daikyo Crystal Zenith and NovaPure components, supports growth through partnerships with leading pharmaceutical companies.

Contract-Manufactured Products

Expected Growth: 7%

West Pharmaceutical Services, Inc.'s 7% growth in Contract-Manufactured Products is driven by increasing demand for injectable drugs, rising adoption of prefilled syringes and cartridges, and growing need for pharmaceutical packaging solutions. Additionally, the company's strategic partnerships, capacity expansions, and investments in advanced manufacturing technologies are contributing to its growth momentum.

7. Detailed Products

NovaPure Stopper

A high-quality, ready-to-use stopper designed for use in lyophilization and other pharmaceutical applications

FluroTec Stoppers

A line of fluoropolymer-coated stoppers designed for use in pharmaceutical and biotechnology applications

Westar RS Stoppers

A line of ready-to-use, sterilized stoppers designed for use in pharmaceutical and biotechnology applications

Daikyo Crystal Zenith Stoppers

A line of high-quality, ready-to-use stoppers designed for use in pharmaceutical and biotechnology applications

Self-Sealing Stoppers

A line of self-sealing stoppers designed for use in pharmaceutical and biotechnology applications

Vial Containment Solutions

A line of vial containment solutions designed for use in pharmaceutical and biotechnology applications

Syringe Containment Solutions

A line of syringe containment solutions designed for use in pharmaceutical and biotechnology applications

Cartridge Containment Solutions

A line of cartridge containment solutions designed for use in pharmaceutical and biotechnology applications

Contract Manufacturing Services

A range of contract manufacturing services designed to support pharmaceutical and biotechnology companies

Analytical Services

A range of analytical services designed to support pharmaceutical and biotechnology companies

8. West Pharmaceutical Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

West Pharmaceutical Services, Inc. operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the company's products are not entirely unique, and some customers may find alternative solutions.

Bargaining Power Of Customers

West Pharmaceutical Services, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often critical components of customers' manufacturing processes, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

West Pharmaceutical Services, Inc. relies on a few key suppliers for certain raw materials, which gives these suppliers some bargaining power. However, the company's large scale and diversified supply chain mitigate this risk.

Threat Of New Entrants

The pharmaceutical packaging industry has high barriers to entry, including significant capital expenditures and regulatory hurdles. This makes it difficult for new entrants to compete with established players like West Pharmaceutical Services, Inc.

Intensity Of Rivalry

The pharmaceutical packaging industry is highly competitive, with several established players competing for market share. West Pharmaceutical Services, Inc. must continually innovate and invest in R&D to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.69%
Debt Cost 3.95%
Equity Weight 90.31%
Equity Cost 9.14%
WACC 8.63%
Leverage 10.73%

11. Quality Control: West Pharmaceutical Services, Inc. passed 9 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

280.23$

Current Price

280.23$

Potential

-0.00%

Expected Cash-Flows