West Pharmaceutical Services, Inc. Just Missed Earnings - But Analysts Have Updated Their Models

West Pharmaceutical Services, Inc. (NYSE:WST) just released its latest quarterly report and things are not looking great. Results look to have been somewhat negative - revenue fell 3.6% short of analyst estimates at US$702m, and statutory earnings of US$1.51 per share missed forecasts by 9.0%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for West Pharmaceutical Services

Taking into account the latest results, West Pharmaceutical Services' ten analysts currently expect revenues in 2024 to be US$2.88b, approximately in line with the last 12 months. Statutory earnings per share are expected to sink 10% to US$6.50 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$3.01b and earnings per share (EPS) of US$7.69 in 2024. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 8.7% to US$361. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values West Pharmaceutical Services at US$470 per share, while the most bearish prices it at US$265. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the West Pharmaceutical Services' past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 0.1% annualised decline to the end of 2024. That is a notable change from historical growth of 11% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - West Pharmaceutical Services is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for West Pharmaceutical Services. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of West Pharmaceutical Services' future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple West Pharmaceutical Services analysts - going out to 2026, and you can see them free on our platform here.

You can also see our analysis of West Pharmaceutical Services' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com