Why West Pharmaceutical Services, Inc. (NYSE:WST) Could Be Worth Watching

Today we're going to take a look at the well-established West Pharmaceutical Services, Inc. (NYSE:WST). The company's stock saw significant share price movement during recent months on the NYSE, rising to highs of US$315 and falling to the lows of US$209. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether West Pharmaceutical Services' current trading price of US$224 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at West Pharmaceutical Services’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out the opportunities and risks within the US Life Sciences industry.

What's The Opportunity In West Pharmaceutical Services?

According to my valuation model, West Pharmaceutical Services seems to be fairly priced at around 13.46% above my intrinsic value, which means if you buy West Pharmaceutical Services today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $197.59, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since West Pharmaceutical Services’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will West Pharmaceutical Services generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. West Pharmaceutical Services' earnings over the next few years are expected to increase by 31%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? WST’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on WST, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for West Pharmaceutical Services from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in West Pharmaceutical Services, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.