Stock of the Day

March 2, 2020

West Pharmaceutical Services (WST)

$218.46
+$7.03 (+3.3%)
Market Cap: $15.70B

About West Pharmaceutical Services

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. This segment also provides drug containment solutions, including Crystal Zenith, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices; and 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. The company serves pharmaceutical, diagnostic, and medical device companies. It sells and distributes its products through its sales force and distribution network, contract sales agents, and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.

West Pharmaceutical Services Bull Case

Here are some ways that investors could benefit from investing in West Pharmaceutical Services, Inc.:

  • Recent upgrades from multiple analysts, including a "buy" rating and a target price of $250.00, indicate strong market confidence in the company's future performance.
  • The current stock price is around $210.85, which may present a buying opportunity for investors looking to enter at a lower price point compared to its 52-week high of $352.33.
  • West Pharmaceutical Services, Inc. reported earnings per share (EPS) of $1.45, exceeding analyst expectations, which reflects strong operational performance and profitability.
  • The company has a solid market capitalization of approximately $15.15 billion, indicating a stable and established presence in the medical instruments sector.
  • With a net margin of 17.03% and a return on equity of 18.60%, West Pharmaceutical Services, Inc. demonstrates effective management and profitability, which are attractive traits for investors.

West Pharmaceutical Services Bear Case

Investors should be bearish about investing in West Pharmaceutical Services, Inc. for these reasons:

  • The stock has experienced significant volatility, with a 52-week range indicating potential risks associated with price fluctuations.
  • Despite recent positive earnings, the company reported a slight year-over-year decline in EPS, which may raise concerns about future growth potential.
  • The current P/E ratio of approximately 31.52 suggests that the stock may be overvalued compared to its earnings, which could deter value-focused investors.
  • Institutional investors hold a significant majority of the stock, which may limit retail investors' influence and could lead to volatility based on institutional trading decisions.
  • The company's PEG ratio of 6.74 indicates that the stock may be priced high relative to its growth rate, suggesting that future growth may not justify the current valuation.
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