Healthcare products company West Pharmaceutical Services (NYSE:WST) announced better-than-expected revenue in Q1 CY2025, but sales were flat year on year at $698 million. The company’s full-year revenue guidance of $2.96 billion at the midpoint came in 1.8% above analysts’ estimates. Its non-GAAP profit of $1.45 per share was 15.3% above analysts’ consensus estimates.
Is now the time to buy WST? Find out in our full research report (it’s free).
West Pharmaceutical Services (WST) Q1 CY2025 Highlights:
- Revenue: $698 million vs analyst estimates of $684.5 million (flat year on year, 2% beat)
- Adjusted EPS: $1.45 vs analyst estimates of $1.26 (15.3% beat)
- Adjusted EBITDA: $165 million vs analyst estimates of $152.7 million (23.6% margin, 8% beat)
- The company lifted its revenue guidance for the full year to $2.96 billion at the midpoint from $2.89 billion, a 2.4% increase
- Management raised its full-year Adjusted EPS guidance to $6.25 at the midpoint, a 2.5% increase
- Operating Margin: 15.3%, down from 17.7% in the same quarter last year
- Free Cash Flow Margin: 8.3%, up from 4% in the same quarter last year
- Market Capitalization: $15.31 billion
StockStory’s Take
West Pharmaceutical Services began 2025 with quarterly revenue and non-GAAP earnings above analyst expectations, driven by steady demand for its high-value product components and growth in GLP-1 related products. Management attributed the revenue performance to a reduced impact from industry-wide destocking and operational improvements in manufacturing, with CEO Eric Green noting, “Our results reflect the West team’s operating execution in the areas where we maintain competitive advantages and strong customer relationships.”
Looking ahead, management raised its full-year revenue and adjusted EPS guidance, pointing to continued strength in GLP-1 demand and early traction from the AnnexOne platform. However, the outlook also factors in ongoing tariff headwinds and the need for operational adjustments as the business shifts towards higher-value products and delivery devices. CFO Bernard Birkett cautioned that, while first-quarter results benefited from cost controls, “there is a lot of uncertainty” related to tariffs and pricing, making future mitigation efforts a priority.
Key Insights from Management’s Remarks
West Pharmaceutical’s first quarter was shaped by strength in GLP-1 products, steady operational execution, and early contributions from new product initiatives. Leadership emphasized both the opportunities and challenges presented by changing product mix, tariffs, and customer demand trends.
- GLP-1 Product Growth: The company’s elastomer products for GLP-1 therapies grew to about 7% of total revenue, with management highlighting this segment as a key growth driver and an area of continued investment.
- AnnexOne Momentum: The AnnexOne platform, which helps pharmaceutical customers meet evolving regulatory requirements for drug packaging, contributed more revenue than expected in Q1 and now has over 340 active projects, up from 280 last quarter.
- SmartDose Delivery Device Strategy: West is pursuing margin improvement in its SmartDose business through automation and cost reductions, while also evaluating strategic alternatives for the segment as it currently delivers lower margins than other high-value products.
- Contract Manufacturing Transition: Growth in GLP-1 auto-injector manufacturing offset the planned exit from certain continuous glucose monitoring (CGM) contracts, with management aiming to fill capacity by moving into higher-margin drug handling projects.
- Executive Leadership Changes: CFO Bernard Birkett announced his planned departure, and Shane Campbell was introduced as the new Chief Proprietary Segment Officer, reflecting an ongoing evolution in West’s leadership team.
Drivers of Future Performance
Management’s outlook for the remainder of the year centers on continued demand for GLP-1 products, operational efficiency, and the ability to navigate external cost pressures such as tariffs and product mix shifts.
- GLP-1 and Biologics Expansion: West expects continued growth in GLP-1 components and a ramp-up in biologics high-value product sales, especially in the second half of the year, as destocking trends subside and customer demand recovers.
- Mitigating Tariff Headwinds: The company is prioritizing tariff mitigation strategies, including passing costs to customers and leveraging its global manufacturing footprint to minimize cross-border exposure, though management acknowledges significant uncertainty remains.
- SmartDose and Automation: Improving margins in the SmartDose business through automation and evaluating its future role in the portfolio are key, with a new automated line expected to come online by early next year.
Top Analyst Questions
- Paul Knight (KeyBanc): Asked about utilization assumptions for the new Dublin site; management stated utilization is low currently but expected to ramp as drug handling operations launch late this year or early next.
- Larry Solow (CJS Securities): Probed the impact of inventory destocking and timing on high-value product growth; management cited temporary supply constraints and expects demand to pick up in the second half.
- Justin Bowers (Deutsche Bank): Sought clarity on tariff impacts and customer behavior; management confirmed tariff effects are built into guidance, with ongoing mitigation efforts but no major changes in customer ordering patterns.
- David Windley (Jefferies): Asked about margin trade-offs from product mix and the economic step-up from AnnexOne projects; management acknowledged a positive margin impact from AnnexOne but said the effect is not yet material.
- Doug Schenkel (Wolfe Research): Questioned the outlook for SmartDose pricing and the absence of tariff pass-through in guidance; management confirmed no pricing benefits from SmartDose or tariff surcharges are included in current projections.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace at which GLP-1 and biologics product demand accelerates as industry destocking ends, (2) progress in automating SmartDose production and its impact on segment margins, and (3) management’s ability to offset tariff-related headwinds through cost mitigation, customer pricing, and global supply chain adjustments. Developments in the AnnexOne platform and ongoing leadership transitions will also be important indicators of execution.
West Pharmaceutical Services currently trades at a forward P/E ratio of 33.3×. In the wake of earnings, is it a buy or sell? See for yourself in our free research report.
Stocks That Trumped Tariffs in 2018
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.