West Pharmaceutical Services Earnings: Here’s Why the Stock is Rising Now

West Pharmaceutical Services, Inc. (NYSE:WST) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 3.37%.

West Pharmaceutical Services, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 8.86% to $0.86 in the quarter versus EPS of $0.79 in the year-earlier quarter.

Revenue: Rose 6.07% to $344.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: West Pharmaceutical Services, Inc. reported adjusted EPS income of $0.86 per share. By that measure, the company beat the mean analyst estimate of $0.82. It missed the average revenue estimate of $349.85 million.

Quoting Management: “Both business segments delivered improvements when compared to the very strong second quarter of 2012, which was a breakout quarter for our high-value products” said Donald E. Morel Jr., PhD, West’s Chairman and Chief Executive Officer. “Sales growth continues to be solid and we improved consolidated gross margin 1.8 percentage points on the combination of higher prices, production efficiencies and softer commodity markets. The margin expansion comes on top of a 4.0 percentage point improvement in the second quarter of 2012. In the PDS business, sales of proprietary administration systems and CZ containers grew by over 30%, lifting gross margins and offsetting a decline in contract manufacturing revenue that was due to projects being delayed. We also received a $20 million exclusivity fee in the quarter for SmartDose. Although not significant to our results in 2013, it represents a substantial milestone for that technology.”

Key Stats (on next page)…

Revenue increased 1.5% from $339.4 million in the previous quarter. EPS decreased 1.15% from $0.87 in the previous quarter.

Looking Forward: Analysts have a neutral outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.69 and has not changed. For the current year, the average estimate is a profit of $3.14, which is the same with that ninety days ago.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)