WST Stock Soars After Company Raises Full-Year Guidance On Strong Demand For GLP-1 Drug Components

• The Pennsylvania-headquartered company raised its full-year net sales guidance to $3.06 billion to $3.07 billion, up from $3.04 billion to $3.06 billion. 
• The company is banking on strong demand for its high-value product (HVP) components used in GLP-1 drugs for weight loss and diabetes management. 
• For Q3, West Pharmaceutical reported adjusted and diluted EPS of $1.92, compared to $1.85 in the same period last year. 
   

Shares of West Pharmaceutical Services (WST) soared 12% on Thursday afternoon after the company increased its full-year earnings guidance after its third-quarter earnings beat Wall Street expectations.

The Pennsylvania-headquartered company, which manufactures packaging components and delivery systems for injectable drugs and healthcare products, raised its full-year net sales guidance to $3.06 billion to $3.07 billion, up from $3.04 billion to $3.06 billion.

It also hiked its full-year adjusted earnings per share (EPS) outlook to $7.06 to $7.11, up from $6.65 to $6.85, citing strong demand for its high-value product (HVP) components used in GLP-1 drugs for weight loss and diabetes regulation. In Q3, HVP components accounted for 48% of the company's total net sales.

The firm, however, flagged that it continues to anticipate $15 million to $20 million in tariff-related costs this year.

CEO Remarks

Chief Executive Eric M. Green stated that several factors drove HVP component sales in Q3. “First, elastomers for GLP-1s had strong growth and now account for 9% of total company sales. We benefit from our longstanding relationships as we partner with our customers in this market, supporting them as they expand their GLP-1 franchises…We expect this market to continue to evolve as there are a number of new early-stage trials seeking to expand the range of indications and treatments using GLP-1s,” Green said.

He added that the company, which includes weight-loss drugmakers Eli Lilly and Novo Nordisk among its customers, is also collaborating with customers who are launching new GLP-1 molecules and generics.

Third Quarter Earnings

For the third quarter (Q3), West Pharmaceutical reported adjusted and diluted EPS of $1.96, compared to $1.85 in the same period last year, and above an analyst estimate of $1.68, according to data from Fiscal AI. Net sales increased 7.7% year-over-year to $804.6 million in the quarter.

The company reported a 16.3% increase in net sales of its HVP components to $390 million in the quarter. Contract-manufactured products segment net sales, meanwhile, rose 8% to $157.1 million, driven by increased sales of self-injection devices for obesity and diabetes.

Evercore ISI analyst Daniel Markowitz raised the firm's price target on West Pharmaceutical to $390 from $350 while keeping an ‘Outperform’ rating on the shares following the earnings call.

On Stocktwits, retail sentiment around WST stock improved from ‘bearish’ to ‘neutral’ territory over the past 24 hours, while message volume stayed at ‘extremely high’ levels.

WST stock is down by 5% this year but has risen over 8% over the past 12 months. 

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