Yahoo Finance West Pharmaceutical Services, Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now
West Pharmaceutical Services, Inc. (NYSE:WST) missed earnings with its latest second-quarter results, disappointing overly-optimistic forecasters. 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%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out 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 decline 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. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
It'll come as no surprise then, to learn that the analysts have cut their price target 8.7% to US$361. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on West Pharmaceutical Services, with the most bullish analyst valuing it at US$470 and the most bearish at US$265 per share. 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.
Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.1% by the end of 2024. This indicates a significant reduction from annual 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. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple West Pharmaceutical Services analysts - going out to 2026, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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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
