West Pharmaceutical Services WST is scheduled to release third-quarter 2024 results on Oct. 10, before the opening bell. In the last reported quarter, the company delivered an earnings miss of 14.12%. WST’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 6.44%.

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Q3 Estimates

Currently, the Zacks Consensus Estimate for revenues is pegged at $710.2 million, indicating a decline of 5% from the year-ago period’s level. The consensus mark for earnings is pinned at $1.51 per share, indicating a decline of 30.1% year over year.

Factors to Note

During the second quarter, West Pharmaceutical’s Proprietary Products segment sales were hurt by an elevated level of customer destocking across its business units. The trend is likely to have continued in the third quarter, pulling sales down. A weak pharma market and declining sales related to COVID-19 vaccines are expected to have contributed to the decline. The declining trend in the Generic market unit and the Biologics market unit is likely to have continued as well.

Product-wise, sales of Administrative Systems, FluroTec and Westar products, along with Daikyo Crystal Zenith components, are likely to have decreased during the soon-to-be-reported quarter.

WST witnessed a strong uptake of HVP components, which include self-injection, Envision components and NovaPure products in the second quarter. The trend is projected to have continued in the quarter to be reported, partially cushioning the sales decline in the segment.

The company is also expected to have witnessed a gross margin contraction in the aforementioned segment. This was likely due to an unfavorable mix of products sold (stemming from the demand for high-value products), production efficiencies and higher sales prices.

On its second quarter earnings call, WST lowered its top and bottom-line outlook for 2024 by more than 4% and 16%, respectively, as measured by the midpoint of the new and earlier guided ranges.

West Pharmaceutical Services, Inc. Price and EPS Surprise

West Pharmaceutical Services, Inc. price-eps-surprise | West Pharmaceutical Services, Inc. Quote

WST’s Contract-Manufactured Products segment might have aided top-line growth due to expanding customer demand for its services during the quarter.

The company’s business is exposed to foreign currency exchange rate fluctuations, which are likely to have negatively impacted its third-quarter performance. Meanwhile, WST is investing in capacity expansion, especially to support its HVP products. This is likely to have driven cash burn during the soon-to-be-reported quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for WST this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate is -0.16%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4 (Sell) at present.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.

Masimo MASI has an Earnings ESP of +0.40% and a Zacks Rank #2 at present.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is likely to release third-quarter 2024 results on Nov. 5. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.63%. The Zacks Consensus Estimate for EPS is expected to improve 33.3% from the year-ago reported figure.

ACADIA Pharmaceuticals ACAD has an Earnings ESP of +38.39% and a Zacks Rank #3 at present. The company is expected to release third-quarter 2024 results on Nov. 6.

ACAD’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 42.37%. The Zacks Consensus Estimate for EPS is expected to surge 127.5% from the year-ago quarter’s figure.

Becton, Dickinson and Company BDX has an Earnings ESP of +0.91% and a Zacks Rank #3 at present. The company is expected to release third-quarter 2024 results on Nov. 7.

BDX’s earnings surpassed estimates in three of the trailing four quarters and met once, the average surprise being 6.24%. The Zacks Consensus Estimate for EPS is expected to increase 10.2% from the year-earlier quarter’s reported figure.

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