PresentationGood morning, all, and welcome. My name is [ Fazi Kash], and I'll be moderating today's session. It is my pleasure to introduce Eric Green, President, CEO and Board Chair; Bob McMahon, CFO; and John Sweeney, VP of IR of West to the JPMorgan conference. And without further ado, I'll hand it over to Eric.Eric GreenNon-Independent Chair of the Board, President & CEO All right. [ Fazi], thank you so much for the introduction, and thank you for the invitation for the JPMorgan Conference. Happy New Ye ...

Summary of West Pharmaceutical Services FY Conference Call Company Overview - **Company**: West Pharmaceutical Services (NYSE: WST) - **Industry**: Injectable medicine and pharmaceutical packaging - **Revenue**: Approximately $3 billion in 2024 with a 20% operating margin [7][8] Key Points and Arguments Business Model and Growth - West is a global leader in the injectable medicine space, with a robust business model that supports long-term organic growth of 7%-9% and margin expansion [3][31] - The company has developed a significant competitive advantage through proprietary solutions, quality, reliability, and global scale [3][4] - High-value product (HVP) components represent 48% of the business and are the fastest-growing segment, expected to continue driving growth [10][26] Market Trends - The rise of biologics and biosimilars is a key growth driver, with West participating in over 90% of new biologics approvals [17][38] - Regulatory changes, particularly Annex 1 in Europe, are expected to enhance revenue through increased quality expectations and higher average selling prices (ASP) [12][22][38] - The injectable medicine market is growing rapidly, with double-digit growth anticipated for HVP components [12][40] Product Portfolio - West produces over 41 billion components annually, with a focus on high-value products such as elastomer components and drug delivery devices [4][5] - The company serves a diverse customer base, including the top 30 pharmaceutical companies, and its elastomer components are used in approximately 75% of injectable drugs on the market [6][9] Financial Performance - HVP components grew 13.3% on an organic basis in Q3 2025, driven by GLP-1s and new biologics launches [40] - The company expects continued growth in HVP components, although at a slower pace than the recent 50% increase in GLP-1s [41][43] - Free cash flow grew around 54% in the first nine months of the previous year, indicating strong cash generation capabilities [32] Strategic Initiatives - West has made significant investments in proprietary products and contract manufacturing, particularly during the COVID-19 pandemic [23] - The company is transitioning to a more focused operating unit structure to enhance accountability and speed in responding to customer needs [27][28] - A recent decision to sell the SmartDose business was made to redirect resources towards higher growth opportunities, indicating a strategic shift [48][49] Management and Team - The management team has been strengthened with new additions, enhancing the company's ability to innovate and respond to market demands [27][29] - The transition to an operating unit structure aims to drive more accountability and speed in decision-making [28] Additional Important Information - The company is well-positioned to support onshoring trends in the U.S. and is leveraging existing assets to meet growing demand [13][39] - The focus on high-value products is expected to continue driving margin expansion and overall business growth [31][33] - West's strong balance sheet and cash generation allow for disciplined capital allocation towards organic growth and shareholder returns [32][54]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Performance and Growth - West Pharmaceutical Services achieved $2.9 billion in net sales in 2024[13] - The company anticipates a return to long-term organic growth of 7-9% with margin expansion[9, 55] - Adjusted operating margin was 19.8% in 2024[13] - Operating cash flow increased by 9% year-over-year in the first nine months of 2025[48] - Free cash flow increased significantly by 54% year-over-year in the first nine months of 2025[49] Market Trends and Opportunities - The injectables market is expected to grow from approximately $700 billion in 2024 to $1.2 trillion by 2030[15] - Biologics are anticipated to increase from 80% of the total injectables market value in 2024 to 90% in 2030[15] - GLP-1 elastomers represent 9% of revenue, and GLP-1 contract manufacturing represents 8% of revenue[26] - Commercialized Annex 1 opportunities are driving 200 bps of FY25 revenues[31] Product and Strategic Focus - High-value product (HVP) components constitute 48% of revenue and drive over 70% of gross profit[36, 37] - The company is selling manufacturing and supply rights for SmartDose® 3.5mL On-Body Delivery System to AbbVie for $112.5 million, representing less than 4% of total company FY25 revenues[53]

Core Viewpoint - West Pharmaceutical Services (WST) shares have shown a modest gain of 0.4% recently, closing at $272.91, with analysts suggesting a potential upside of 26.4% based on a mean price target of $345 [1][4]. Price Targets and Analyst Estimates - The mean estimate consists of 14 short-term price targets, with a standard deviation of $28.55, indicating variability among analysts [2]. - The lowest estimate is $285.00, suggesting a 4.4% increase, while the highest estimate is $390.00, indicating a potential surge of 42.9% [2]. - A low standard deviation signifies a strong consensus among analysts regarding the stock's price direction [9]. Earnings Estimates and Analyst Optimism - Analysts are increasingly optimistic about WST's earnings, as indicated by upward revisions in earnings estimates, which historically correlate with stock price movements [11]. - Over the past 30 days, one estimate has increased, leading to a 0.3% rise in the Zacks Consensus Estimate for the current year [12]. - WST holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, suggesting strong potential for upside [13]. Conclusion on Price Targets - While the consensus price target may not be a reliable predictor of the stock's exact gains, it does provide a useful indication of the expected price movement direction [14].

Core Viewpoint - Investors in the Medical - Dental Supplies sector should consider The Cooper Companies (COO) and West Pharmaceutical Services (WST) for potential investment opportunities, with a focus on which stock is more appealing to value investors [1] Group 1: Zacks Rank and Earnings Outlook - The Cooper Companies has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to West Pharmaceutical Services, which has a Zacks Rank of 3 (Hold) [3] - The improvement in earnings outlook for COO is likely more significant than that of WST [3] Group 2: Valuation Metrics - COO has a forward P/E ratio of 18.52, while WST has a forward P/E of 35.98, suggesting that COO may be undervalued relative to WST [5] - The PEG ratio for COO is 2.38, compared to WST's PEG ratio of 3.80, indicating that COO has a more favorable growth outlook relative to its valuation [5] - COO's P/B ratio is 2.01, while WST's P/B ratio is significantly higher at 6.5, further suggesting that COO is a better value option [6] Group 3: Value Grades - Based on various valuation metrics, COO holds a Value grade of B, whereas WST has a Value grade of D, reinforcing the notion that COO is the more attractive option for value investors [6]

Core Viewpoint - West Pharmaceutical Services, Inc. has reached a definitive agreement to sell all manufacturing and supply rights for the SmartDose® 3.5mL On-Body Delivery System to AbbVie for a total consideration of $112.5 million, expected to close in mid-2026 [1] Group 1: Transaction Details - The sale includes all associated facilities and is subject to working capital and other adjustments [1] - West will continue to supply the SmartDose® 3.5mL system and fulfill ongoing project commitments prior to the closing [2] Group 2: Strategic Rationale - The decision to transition the SmartDose 3.5mL product aligns with West's commitment to its customer development pipeline and patient-centric approach [3] - Revenues from the SmartDose 3.5mL system are anticipated to be approximately 4 percent of total revenues in fiscal year 2025 [3] Group 3: Company Overview - West Pharmaceutical Services is a leading provider of innovative injectable solutions, delivering over 41 billion components and devices annually [4] - In fiscal year 2024, West generated $2.89 billion in net sales and is included in the S&P 500 index [5]

Core Insights - West Pharmaceutical Services, Inc. (NYSE:WST) is recognized as one of the 14 Best Dividend Growth Stocks to Buy and Hold in 2026 [1] Group 1: Market Demand and Growth Drivers - KeyBanc projects that injectable GLP-1 drugs will continue to drive demand for West Pharmaceutical, with limited risk to oral weight loss drugs through 2030 [2] - The firm estimates that the oral version of Wegovy will only contribute approximately 200 basis points to the total GLP-1 market share by 2030, indicating a conservative outlook on oral drug adoption [2] - West Pharmaceutical's drug components business now accounts for 47% of total revenue, reflecting strong demand for components used in GLP-1 weight-loss and diabetes drugs [3] Group 2: Product Offerings - West Pharmaceutical supplies essential medical components such as stoppers, plungers, and delivery systems, which are critical for the safe storage and administration of injectable medicines, including vaccines and biologics [4]

Group 1 - The stock selection process showed positive momentum in December, with an average gain of 0.83% for the selected 15 stocks [1] - The SPDR® S&P 500® ETF was mentioned as a benchmark for performance comparison [1] Group 2 - The analyst holds long positions in various companies, including ZTS, MSCI, DPZ, and others, through stock ownership, options, or derivatives [2] - The article reflects the analyst's personal opinions and is not influenced by compensation from any company mentioned [2]

Company Overview - West Pharmaceutical Services, Inc. (WST) is a leading global healthcare company specializing in the design, manufacture, and sale of innovative containment and delivery systems for injectable drugs and healthcare products, with a market cap of approximately $19.2 billion [1][2] Stock Performance - The stock has decreased by 23.6% from its 52-week high of $348.90 reached in January, while over the past three months, shares have gained 3.1%, underperforming the Health Care Select Sector SPDR Fund (XLV), which gained 12.5% during the same period [3] - Year-to-date, WST has experienced an 18.7% decline, lagging behind XLV's 12% gains, and has dipped 19.4% over the past 52 weeks compared to XLV's 10.6% gain [4] - The stock has been trading above the 50-day moving average since early June and above the 200-day moving average since mid-September, although it has shown some fluctuations recently [4] Market Challenges - The stock's decline in 2025 is attributed to investor concerns regarding its outlook and operational headwinds, including broader pricing pressures, tariff-related cost issues, and inventory destocking by customers, which have negatively impacted near-term growth prospects [5] Competitive Landscape - In comparison, rival Thermo Fisher Scientific Inc. (TMO) has outperformed WST, gaining 7.8% over the past 52 weeks and 9.6% year-to-date [6] - Despite WST's underperformance, it holds a consensus rating of "Strong Buy" from 17 analysts, with a mean price target of $345.36, indicating a potential upside of 29.6% [6]