Healthcare products company West Pharmaceutical Services (NYSE: WST) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 7.7% year on year to $804.6 million. The company’s full-year revenue guidance of $3.07 billion at the midpoint came in 0.5% above analysts’ estimates. Its non-GAAP profit of $1.96 per share was 16.3% above analysts’ consensus estimates.

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Eric M. Green, President, Chief Executive Officer and Chair of the Board, commented: "I am pleased to report that we delivered another solid quarter, with both revenues and profits exceeding our guidance. Our strength was broad-based, across both our Proprietary Products and Contract Manufacturing segments. We achieved double-digit growth in our HVP Components business, driven by our continued execution in GLP-1 products, increased HVP conversion, including Annex 1, and an overall improving demand environment. As a result of the solid performance in the quarter, and the ongoing momentum in our business, we are again increasing our full-year guidance expectations."

Company Overview

Founded in 1923 and serving as a critical link in the pharmaceutical supply chain, West Pharmaceutical Services (NYSE: WST) manufactures specialized packaging, containment systems, and delivery devices for injectable drugs and healthcare products.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, West Pharmaceutical Services grew its sales at a decent 8.2% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. West Pharmaceutical Services’s recent performance shows its demand has slowed as its annualized revenue growth of 1.5% over the last two years was below its five-year trend.

This quarter, West Pharmaceutical Services reported year-on-year revenue growth of 7.7%, and its $804.6 million of revenue exceeded Wall Street’s estimates by 2.1%.

Looking ahead, sell-side analysts expect revenue to grow 5.9% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and indicates its newer products and services will fuel better top-line performance.

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Operating Margin

West Pharmaceutical Services has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 22.7%.

Looking at the trend in its profitability, West Pharmaceutical Services’s operating margin decreased by 6 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 2.6 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

This quarter, West Pharmaceutical Services generated an operating margin profit margin of 20.8%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

West Pharmaceutical Services’s EPS grew at a remarkable 10.8% compounded annual growth rate over the last five years, higher than its 8.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of West Pharmaceutical Services’s earnings can give us a better understanding of its performance. A five-year view shows that West Pharmaceutical Services has repurchased its stock, shrinking its share count by 4.2%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q3, West Pharmaceutical Services reported adjusted EPS of $1.96, up from $1.85 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects West Pharmaceutical Services’s full-year EPS of $7.07 to grow 2.7%.

Key Takeaways from West Pharmaceutical Services’s Q3 Results

We enjoyed seeing West Pharmaceutical Services beat analysts’ full-year EPS guidance expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 4.4% to $289 immediately following the results.

Indeed, West Pharmaceutical Services had a rock-solid quarterly earnings result, but is this stock a good investment here? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.