NEW YORK - West Pharma (NYSE:WST) shares fell sharply by 8% as the company reported second-quarter earnings that missed analyst estimates and cut its full-year guidance.
The manufacturer of pharmaceutical packaging and delivery systems posted adjusted earnings per share (EPS) of $1.52, which was below the consensus estimate of $1.74. Revenue also declined, coming in at $702.1 million against expectations of $729.36 million.
The company's second-quarter performance was marked by a 6.9% decrease in net sales compared to the same period last year, with organic net sales down 5.9%.
The reported-diluted EPS of $1.51 was a significant drop from the $2.06 reported in the prior-year period, indicating a challenging quarter for the company.
Eric M. Green, President, Chief Executive Officer and Chair of the Board, attributed the downturn to "an elevated level of customer destocking," which impacted the quarter's results. Despite the setback, Green expressed optimism for the future, stating, "Our outlook anticipates that revenues in the second half of the year will be stronger than the first half... We remain confident in a return to organic growth in the fourth quarter and as we move into 2025."
Looking ahead, West Pharma has revised its full-year 2024 net sales guidance to a range of $2.870 billion to $2.900 billion, down from the previous forecast of $3.000 billion to $3.025 billion.
The company also adjusted its full-year 2024 adjusted-diluted EPS guidance to a range of $6.35 to $6.65, a decrease from the prior guidance of $7.63 to $7.88. The midpoint of the new EPS guidance range is $6.50, which is significantly below the analyst consensus of $7.74.
The decline in the Proprietary Products Segment, which saw net sales fall by 9.4% to $559.7 million, was a key factor in the quarter's results. The Generics market unit experienced a double-digit organic net sales decline, while the Biologics and Pharma market units also saw declines in sales. In contrast, the Contract-Manufactured Products Segment reported a 4.9% increase in net sales to $142.4 million.
The company's financial health also showed signs of strain, with operating cash flow down 7.8% and free cash flow decreasing by 38.3%. However, West Pharma continued its share repurchase program, buying back 1,239,015 shares for $454.1 million at an average price of $366.53.
Investors reacted negatively to the earnings report and revised guidance, as evidenced by the 8% drop in the company's stock price.
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