West Pharmaceutical Services, Inc. has continued to reaffirm its leadership in injectable drug delivery through the launch of the fully verified PFS System, designed to address the market's evolving needs. In addition, robust demand for proprietary products and high-value components continues to drive growth momentum
West Pharmaceutical was founded in 1923 and is headquartered in Exton, Pennsylvania. The company specializes in the design and manufacture of packaging components and delivery systems for injectable drugs and other healthcare products. The company operates in two segments: Proprietary Products and Contract-Manufactured Products. Geographically, it is segmented into Europe, Middle East, Africa, Americas and Asia Pacific.
Injectable innovation unveiled
West Pharmaceutical launched the West Synchrony™ Prefillable Syringe (PFS) System at CPHI Worldwide. This system provides a fully verified, system-level solution that streamlines syringe selection and accelerates regulatory submissions for pharmaceutical companies. This launch positions the company to capture demand for integrated and regulatory-ready drug delivery systems amid the rise of injectable biologics, enhancing its differentiation and growth prospects in the injectables market.
Improved gearing ratio
West Pharmaceutical demonstrated decent performance over FY 21-24, with a revenue CAGR of 0.7%, reaching $2.9bn in FY 24. This growth was driven by increasing demand for injectable drug delivery systems and better biologics market penetration. Meanwhile, EBIT registered a CAGR of -8.3%, reaching $594.0m, while its margin declined by 646bp to 20.5%.
Over FY 21-24, CFO rose from $584.0m to $653.0m. Its total debt declined from $325m to $305m. Consequently, the company's gearing improved from 13.9% to 11.4%.
Over Q3 25, the company posted decent topline growth, fueled by the strong performance of the Proprietary Products segment, supported by rising demand for GLP-1, self-injection devices, and High-Value components. However, EBIT margins contracted by 47bp to 21.9%.
In comparison, ICU Medical, Inc., a local peer, reported a revenue CAGR of 21.9% over FY 21-24, reaching $2.4bn in FY 24. EBIT declined at a CAGR of -11.7% to $97.4m. Its margin therefore contracted from 10.7% to 4.1%.
Optimistic outlook
The company is currently trading at an EV/EBIT of 31.7x, based on the FY 25 estimated EBIT of $609.9m, which is lower than its 3-year historical average of 33.2x but higher than that of ICU Medical, which is trading at 14.2x.
However, the stock has underperformed due to weak guidance and margin pressures; West Pharmaceuticals is well positioned to benefit from the high-growth GLP-1 drug market. The company paid an annual dividend of $0.8 in FY 24, resulting in a dividend yield of 0.3%.
The stock is monitored by 15 analysts with 12 having 'Buy' ratings and 3 having 'Hold' ratings for a target price of $350.8, implying 27.4% upside potential from the share's current market price.
Looking ahead, analysts project a revenue CAGR of 6.5% for FY 24-27, reaching $3.5bn in FY 27. EBIT is expected to rise at a CAGR of 10.0%, reaching $762.8m, with a margin of 21.8%. Net income is projected to rise at a CAGR of 8.7%, reaching $632.3m. In comparison, ICU Medical's EBIT is expected to increase at a slightly lower CAGR of 9.1% over FY 24-27.
Overall, West Pharmaceutical has posted a steady performance, highlighted by modest growth and improved financial discipline. Looking ahead, the company's expanding biologics portfolio and innovation-led strategy positions it for sustained growth with margin upliftment. However, the company faces risks from supply chain interruptions and regulatory reforms, which may jeopardize compliance and impair efficiency across its global production.
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