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West Pharmaceutical Stock Analysis

West Pharmaceutical Stock Analysis

This is an introduction to my West Pharmaceutical stock analysis which is based on FY2017 results and FY2018 guidance provided by management.

Introduction

A reader recently inquired about my opinion on West Pharmaceutical Services, Inc. (NYSE: WST). This reader was of the opinion the stock might be a worthwhile addition to his portfolio because:

  • the company's stock has retraced to ~$87 from its high of ~$103 set in October 2017.
  • the cumulative total return of WST's common stock has far exceeded the cumulative total return of the following Standard & Poor's (“S&P”) indices (500, MidCap 400 Index, and the 400 Health Care Equipment & Supplies Industry) over the past 5 years.

About West Pharmaceutical

WST was incorporated in 1923 and is a member of the Medical Instruments and Supplies industry . It currently has a market cap of ~$6.44B and is the 8th largest member of the Medical Instruments and Supplies industry from a market cap perspective.

The company is comprised of two Operating segments:

  • Proprietary Products Segment (~77% of ~$1.6B of Net Sales in FY2017);
  • Contract-Manufactured Products Segment (~23% of ~$1.6B of Net Sales in FY2017).

It manufactures ~41 billion components annually from 3.3 million square feet of manufacturing space in 28 manufacturing facilities around the world.

The top 50 injectable biologics rely on WST and Daikyo components; some key value-added and proprietary products and processes are licensed from Daikyo. WST also supplies the top 75 pharmaceutical and biotech injectable companies.

WST’s ten largest customers accounted for 37.5% of FY2017 consolidated net sales but no single customer accounted for greater than 10% of consolidated net sales.

 

Please click here to read this West Pharmaceutical stock analysis which is based on FY2017 results and FY2018 guidance provided by management when it released its Q4 and FY2017 financial results on February 15, 2018 and when it presented at RBC Capital Markets Global Healthcare Conference on February 21, 2018.

By |April 11th, 2018|General Investing|Comments Off on West Pharmaceutical Stock Analysis

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