Analyst Says West Pharmaceutical Services Is 'Expensive But For Good Reason'

Stephens upgraded West Pharmaceutical Services WST from Equal Weight to Over Weight, with a price target of $400, up from $330.
The analyst says, "West Pharma is expensive for a reason (dominant market share, growing end-markets, quality management team), and we are tired of using valuation as an excuse, especially as there are potential upside drivers to numbers in coming years."
The company has a 70% share in the rubber containment (plungers/stoppers) market, representing a small cost vs. the price of a drug. WST has a long quality track record.
The shift to HVP products is driving robust growth as these components cost 30-40+ cents per unit vs. standard products at 1-2 cents.
The company sells into a biologics and injectable drug market, supporting years of stable growth.
The analyst says the stock has admittedly had a strong move already in 2023 and the sentiment has improved for a good reason, as the fundamental outlook is quite positive.
Price Action: WST shares are up 1.74% at $355.88 on the last check Tuesday.

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