West Pharmaceutical Services WST is scheduled to release fourth-quarter 2024 results on Feb. 13, before the opening bell. In the last reported quarter, the company delivered an earnings beat of 22.52%. WST’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.04%.

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Q4 Estimates

Currently, the Zacks Consensus Estimate for revenues is pegged at $739.6 million, indicating growth of 1% from the year-ago period’s level. The consensus mark for earnings is pinned at $1.75 per share, indicating a decline of 4.4% year over year.

Our model estimates total revenues to be $744.8 million, impying a 1.4% organic improvement year over year. The adjusted EPS is estimated to be $1.77. While the Proprietary Products segment sales are anticipated to be $603.1 million (organic growth of 1.3%), Contract-Manufactured Products segmental sales are likely to be $141.7 million (organic growth of 2%). However, operating profit for the Proprietary Products and Contract-Manufactured Products segments are likely to decline 0.4% and 2.9%, respectively.

Factors to Note

West Pharmaceutical Services delivered a solid third-quarter performance in 2024, beating both revenue and earnings expectations. With reported revenues of $746.9 million and earnings per share (EPS) of $1.85, the company demonstrated resilience despite industry-wide destocking challenges. As the company is poised to post fourth-quarter results, a segmental analysis suggests a mix of continued growth and stabilization, supported by strategic investments in high-value products (HVPs), contract manufacturing and biologics.

In the proprietary products segment, which remains the primary revenue driver, sales declined marginally due to destocking trends during the third quarter. However, the pharma market unit exhibited a mid-single-digit increase, driven by rising sales of Nova brand products and administrative systems. The biologics segment experienced a low-single-digit decline, primarily due to the continued destocking of FluroTec, NovaPure and Westar products. This was offset by an increase in drug delivery device sales. The generics segment continued to see a mid-single-digit decline as well. While Stabilization in pharma and biologics should have contributed to incremental revenue growth during the fourth quarter, generics may take longer to recover.

West Pharmaceutical’s contract manufacturing segment maintained stable revenues in the last reported quarter, consistent with the third quarter of 2023. Notably, gross profit margins in this segment improved 130 basis points, driven by operational efficiencies.

The company is strategically expanding contract manufacturing capabilities, particularly in wearable self-injection devices and auto-injectors for GLP-1 treatments. With production ramping up in the Phoenix, Grand Rapids and Dublin facilities, contract manufacturing revenues should have remained steady in the fourth quarter, with the potential for long-term margin expansion as these initiatives mature.

One of the most promising growth areas for WST remains biologics, particularly through high-value containment and delivery systems. The company emphasized its strong positioning in immunology, oncology, rare diseases and obesity treatments. The ramp-up of on-body self-injection devices and increased customer engagement in biologics signal stronger demand in the fourth quarter. While some lingering destocking effects may persist, particularly in high-value products like NovaPure, improving trends suggest that biologics could return to growth by the end of the year.

West Pharmaceutical Services, Inc. Price and EPS Surprise

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

Despite these positive indicators, WST’s financial performance in the fourth quarter must have been continued to be influenced by macroeconomic factors and customer inventory management strategies. The lower production volumes in its high margin HVP components and a mixshift to lower margin drug delivery devices is hurting gross profit margins, a trend likely to continue in the soon-to-be-reported quarter. However, it remains committed to operational improvements, automation and strategic pricing initiatives to support profitability.

Looking ahead, WST is likely to have maintained its growth trend in the fourth quarter on the back of continued normalization in pharma and biologics, execution on high-value product expansion and ongoing improvements in contract manufacturing efficiencies. While some headwinds might have persisted, the company's strong market positioning, strategic investments and customer engagement must have provided confidence in a positive trajectory. With EPS projection raised to a range of $6.55-$6.75 for the full year, WST appears well positioned to maintain momentum into the final quarter of 2024 and beyond.

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 0.00%. 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 #3 at present.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to come up with an earnings beat this reporting cycle.

Natera NTRA has an Earnings ESP of +61.91% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

NTRA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 36.37%. The Zacks Consensus Estimate for fourth-quarter EPS implies a rise of 34.4% from the year-ago reported figure.

Masimo MASI has an Earnings ESP of +4.05% and a Zacks Rank #2 at present. 

The company is scheduled to release fourth-quarter 2024 results on Feb. 25. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.10%. The Zacks Consensus Estimate for EPS implies an improvement of 14.4% from the year-ago reported figure.

Maravai LifeSciences MRVI has an Earnings ESP of +10.00% and a Zacks Rank #2 at present. The company is expected to release fourth-quarter 2024 results in February.

MRVI delivered a trailing four-quarter average earnings surprise of 116.67%. The Zacks Consensus Estimate for fourth-quarter EPS implies a decline of 400% from the year-ago reported figure.

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