West Pharmaceutical Services WST is scheduled to release third-quarter 2022 results on Oct 27, before the closing bell. In the last reported quarter, the company delivered an earnings surprise of 12.79%. Its earnings beat estimates in each of the trailing four quarters, the average surprise being 9.43%.
Currently, the Zacks Consensus Estimate for third-quarter revenues is pegged at $730.6 million, suggesting growth of 3.4% from the year-ago reported figure. The consensus mark for earnings stands at $2.12 per share, indicating an improvement of 2.9% from the prior-year quarter.
Factors to Note
West Pharmaceutical’s Proprietary Products business continues to exhibit sustained strength and has been an important contributor to the company’s top-line growth. In the first half of 2022, sales improved significantly on the back of double-digit growth in high-value products (HVP). The trend is likely to have continued in the third quarter.
Apart from this, the company is likely to have witnessed margin expansion in the aforementioned segment in the to-be-reported quarter, owing to a favorable mix of products sold (stemming from the demand in HVP), production efficiencies and higher sales price.
It has been witnessing strong uptake of HVP components, which include Westar and NovaPure offerings. This momentum is likely to have been sustained in the quarter to be reported.
West Pharmaceutical has been making significant efforts to retain customers’ faith in the company amid the uncertainty triggered by the pandemic. Apart from ensuring the well-being and safety of team members worldwide, it has successfully maintained the continuity of manufacturing and supply of components to customers. This, in turn, might have favored its third-quarter performance.
West Pharmaceutical Services, Inc. Price and Consensus
West Pharmaceutical Services, Inc. price-consensus-chart | West Pharmaceutical Services, Inc. Quote
West Pharmaceuticals’ business is exposed to foreign currency exchange rate fluctuations, which is likely to have adversely impacted the company’s third-quarter performance. The company had lowered its full-year guidance for revenues and adjusted earnings per share on its second-quarter earnings call, primarily citing unfavorable foreign currency movements. It also expects COVID-related sales to decline further in the second half of 2022, after slightly declining year over year in the second quarter.
What Our Quantitative Model Suggests
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see.
Earnings ESP: West Pharmaceuticals has an Earnings ESP of -1.51%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Baxter International BAX has an Earnings ESP of +1.31% and a Zacks Rank of 3.
Baxter’s stock has declined 27.5% so far this year. BAX missed earnings estimates in the last reported quarter. Baxter has a four-quarter earnings surprise of 6.15%, on average.
McKesson MCK has an Earnings ESP of +0.27% and a Zacks Rank of 2.
McKesson’s stock has gained 41.9% so far this year. MCK beat earnings estimates in the last reported quarter. McKesson has a four-quarter earnings surprise of 13.00%, on average.
AmerisourceBergen ABC has an Earnings ESP of +0.61% and a Zacks Rank of 3.
AmerisourceBergen’s stock has gained 5.8% so far this year. ABC topped earnings estimates in the last reported quarter. AmerisourceBergen has a four-quarter earnings surprise of 2.63%, on average.
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Baxter International Inc. (BAX) : Free Stock Analysis Report
AmerisourceBergen Corporation (ABC) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
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