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Western Pharmaceutical Services, Inc. (WST – Free Report) is well positioned for growth supported by a robust proprietary product segment and sustained strength in research and development (R&D).
Zacks Rank # 2 (Buy) shares jumped 41.1% from industry growth of 28.1% in one year. The S&P 500 Index rose 31.5% over the same period.
West Pharmaceutical – with a market capitalization of $ 31.05 billion – is a leading global manufacturer in the design and production of technologically advanced, high-quality integrated containment and delivery systems for injectable drugs. and health products. He expects profits to improve 27.3% over the next five years. The company has a surprise profit for the last four quarters of 29.6% on average.
Key enablers
The proprietary products business continues to show sustained strength and contributes significantly to West Pharmaceutical’s top line growth. Customers in this segment primarily include several of the world’s leading biologics, generics and pharmaceutical companies that incorporate components and other offerings into their injectable products for distribution to patients, who are the end users.
In 2020, this segment’s net sales grew 17.9% year-on-year and the first half of 2021 was no exception. Sales grew 39.6% organically in the second quarter driven by double-digit growth in HVP (which represented 70% of quarterly sales) and strong momentum across all biologics and pharmaceuticals market units during the quarter under review.
Image source: Zacks Investment Research
The expansion of margins in this segment has been encouraging. The second quarter gross profit margin increased 700 basis points year over year thanks to a favorable mix of products sold (resulting from the demand for HVP), production efficiency and the increase in the sale price.
West Pharmaceutical has its own research-scale production facilities and laboratories to create new products, and provides contract engineering design and development services to help customers develop new products.
The company continues to seek innovative strategic platforms in prefillable syringes, injectable containers, advanced injection systems and safety and administration. In the second quarter of 2021, the company’s R&D spending increased 27.8% from the previous year quarter. West Pharmaceutical remains committed to seeking new and innovative opportunities to acquire, license, partner or develop products, services and technologies. The company is focused on its goal of connecting the dots across science and technology to realize potential value creation ideas.
Trend in estimates
West Pharmaceutical has witnessed an upward revision trend in estimates for 2021. Over the past 90 days, Zacks’ consensus estimate for its earnings has risen 2.8% north to 8, $ 22.
Zacks’ consensus estimate for Q3 2021 revenue is set at $ 684.7 million, which suggests growth of 24.9% from the figure released a year ago.
Other actions to consider
Some other top-ranked titles in the wider medical space are AmerisourceBergen Corporation (ABC – Free report), McKesson Company (MCK – Free report) and Patterson Companies, Inc. (PDCO – Free Report), each currently wearing a Zacks Rank # 2. You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.
AmerisourceBergen’s long-term profit growth rate is estimated at 11.3%.
McKesson’s long-term earnings growth rate is estimated at 7.5%.
Patterson Companies’ long-term profit growth rate is projected at 9.6%.
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