Increase In West Pharmaceutical Exposure

In my May 20 West Pharmaceutical (WST) post, I disclosed the purchase of an additional 100 shares @ ~$345.56 in the FFJ Portfolio on May 20 after listening to WST's presentation at BofA's Health Care Conference 2024.

Nothing has materially changed following that purchase. WST's share price has, however, experienced subsequent weakness thus leading me to acquire an additional 100 shares @ $312.70 on June 18; my WST exposure is now 400 shares in a 'Core' account in the FFJ Portfolio.

As noted in my previous post, it often takes months/years for WST to be prepared to accommodate its clients' future needs. If, for example, WST determines that it merely needs to make equipment changes, the lead time is 12 - 24 months. If it needs to build or modify facilities, the lead time is typically more than 2 years.

WST has ramped up its CAPEX over the past several quarters to accommodate future growth. This elevated level of CAPEX and short term inventory 'destocking' by its clients has negatively impacted short term results.

Final Thoughts

The time to invest in a great company is before business conditions improve. Once the short term headwinds pass and investors 'jump on the bandwagon', a company's valuation typically is no longer attractive. In essence...'zig when others zag'.

WST is generally overvalued but short term headwinds have pressured its valuation. I think investors have a 'window of opportunity' to invest in this global market leader in primary packaging and delivery components for injectable therapeutics.

Management has reiterated its guidance of 2% - 3% top-line growth with an acceleration expected in the second half of the year with strong results in Q4 2024. Once top-line growth accelerates, I envision the current weakness in WST's share price will end.

I wish you much success on your journey to financial freedom!

Note: Please send any feedback, corrections, or questions to [email protected].

Disclosure: I am long WST.

Disclaimer: I do not know your circumstances and do not provide individualized advice or recommendations. I encourage you to make investment decisions by conducting your research and due diligence. Consult your financial advisor about your specific situation.

I wrote this article myself and it expresses my own opinions. I do not receive compensation for it and have no business relationship with any company mentioned in this article.