West Pharmaceutical Services (WST): A Strong Earnings Recovery With a Potential Breakout Ahead
West Pharmaceutical Services (WST) is benefiting from one of the fastest-growing areas of healthcare, and it doesn’t need to develop a blockbuster drug to participate.
The company makes essential components used to package and deliver injectable medications, including rubber stoppers, seals, syringe plungers and auto-injectors. Its products are used across the pharmaceutical industry, from vaccines and biologics to insulin and GLP-1 weight-loss treatments.
That gives West an attractive position in the rapidly expanding market for injectable drugs. Rather than betting on which pharmaceutical company develops the most successful treatment, investors can own a business that supplies the components those companies need to deliver their products.
And after several difficult years, West’s financial performance is improving considerably.
The company struggled following the pandemic as customers worked through inventories accumulated during the COVID-19 vaccine boom. Revenue barely moved between 2021 and 2024, increasing from $2.83 billion to $2.89 billion, while diluted earnings per share fell from $8.67 to $6.69.
Things got particularly ugly on February 13, 2025, when management projected full-year earnings of just $6.00 to $6.20 per share, well below the $7.44 analysts had expected. The stock plunged 38% that day, contributing to a nearly 60% decline from its September 2021 peak of $475.
But the turnaround is now showing up in the numbers.
Second-quarter 2026 revenue climbed 13.8% to $872 million, while adjusted earnings jumped 28.8% to $2.37 per share, beating expectations by $0.29. Gross margin improved by two percentage points to 37.7%, reversing some of the pressure that had weighed on profitability.
One of the most encouraging developments is the growth of West’s high-value components business. These premium products, including specialized stoppers and seals, saw sales increase 19.4% and now account for 49% of total revenue.
GLP-1 treatments have become an especially important contributor, representing 18% of company revenue. With demand for injectable weight-loss medications continuing to support the business, West has a meaningful growth opportunity alongside its established pharmaceutical customers.
Management has also become considerably more optimistic about the year ahead.
West has raised its 2026 guidance twice. Its full-year sales outlook has increased from the original $3.22 billion to $3.275 billion range in February to $3.345 billion to $3.38 billion. Adjusted earnings are now expected to reach $8.85 to $9.05 per share, representing growth of 21% to 24%.
That earnings outlook is nearly 50% higher than the guidance that triggered last year’s historic sell-off.
There are additional reasons to like the direction of the business. West recently sold its SmartDose 3.5mL injector business to AbbVie for approximately $136 million, repurchased $454 million in shares during the first half of 2026, and authorized a new $1 billion buyback program, equivalent to roughly 4% of its market capitalization.
The company also has new leadership. Michel Lagarde became CEO on August 31, succeeding Eric Green. Lagarde previously served as chief operating officer at Thermo Fisher Scientific, where he oversaw the majority of that company’s businesses.
Investors have started responding to the improvement. West shares have gained 37% year to date and 45% over the past twelve months, recovering substantially from their 52-week low of $223.83.
The stock trades around $373 per share, or approximately 42 times the midpoint of management’s 2026 earnings guidance. That’s a premium valuation, but earnings are growing more than 20%, and the multiple remains below the roughly 55 times earnings investors paid at the stock’s 2021 peak.
We also like what we’re seeing in the stock’s technical setup.
After spending months trading between approximately $225 and $290, West broke above that range in late April. Its 50-day moving average subsequently crossed above its 200-day moving average, reinforcing the improving trend.
The stock encountered resistance around $383 in late July, then pulled back toward $325 before recovering. Another decline toward $330 in early September also attracted buyers. Those repeated recoveries suggest investors have been willing to step in on weakness.
Now the stock is approaching that $383 resistance level again. A sustained close above it would mark a fresh 52-week high and could signal another leg higher.
For investors managing risk, the $350 area is an important near-term level, roughly corresponding to the rising 50-day moving average and the top of the August consolidation range. A close below that level could signal that the breakout attempt is losing momentum. Longer-term investors can watch the $325 to $330 support zone, which has held twice in recent months.
Of course, the valuation leaves less room for disappointment if earnings growth slows. And while the stock’s recovery has been impressive, a breakout above $383 isn’t guaranteed.
Still, we think the combination of improving fundamentals and strengthening price action makes West Pharmaceutical particularly interesting right now.
The company is delivering double-digit revenue growth, expanding margins, raising earnings guidance and benefiting from growing demand for higher-value injectable drug components. Its exposure to GLP-1 treatments adds another meaningful opportunity without requiring investors to pick a winner among competing drugmakers.
With earnings expected to grow more than 20% this year and shares approaching an important technical breakout level, we think West Pharmaceutical Services is an attractive healthcare growth stock to consider now.
