WEST PHARMACEUTICAL SERVICES, INC. (WST): what the price assumes
In the published model solve dated 2026-Q2, anchored at $337.47, WEST PHARMACEUTICAL SERVICES, INC. (WST) is priced for today's economics sustained for ~6.9 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.
Generated: 2026-08-30 · Source: https://boothcheck.com/report/WST
Headline
| Field | Value |
|---|---|
| Ticker | WST |
| Company | WEST PHARMACEUTICAL SERVICES, INC. |
| Current price | $337.47/sh |
| Composition | Proprietary Products 81% / Contract-Manufactured Products 19% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 22.2% |
| Operating margin today | 20.5% |
| Margin expansion (value-band) | +1.7pp |
| Must persist for | 6.9y |
| Multiple paid | 34x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
Solve inputs: computed at a 9.2% cost of capital; growth searched up to the 25% self-funding ceiling.
How unusual the bet is: elevated (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +0.74σ |
| cohort percentile (of 115 peers) | 79 |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.89x | 5 | expensive |
| Earnings | 4.00x | 5 | expensive |
| Relative | 1.79x | 2 | expensive |
| Growth | 1.10x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $161.54 | 2.09x | yes | FCF base $0.5B, growth 13% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection |
| DCF Exit Multiple | Growth | $344.62 | 0.98x | yes | Exit EV/EBITDA: 25.4x / 27.4x / 29.4x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | — | — | no | P/E 29.41x (blended: static sector reference 24x + trailing (TTM) 42x), scenarios: 24.4x / 29.4x / 34.4x (bear / base = reference held flat / bull), EV/EBITDA 19.42x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $86.78 | 3.89x | yes | BV/sh $42.49, ROE (TTM) 18.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $122.54 | 2.75x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $307.80 | 1.10x | yes | Rev $3.3B, growth 13% (input: historical growth; tapered), Terminal P/S: 5.9x / 7.1x / 8.4x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $156.71 | 2.15x | yes | EPS $7.81, growth 20% (input: historical EPS growth), PEG=2.10 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $85.64 | 3.94x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.67B × (1−18%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $120.38 | 2.80x | yes | BV $42.49 + 5yr PV of (ROE (TTM) 18.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $86.41 | 3.91x | yes | √(22.5 × EPS $7.81 × BVPS $42.49) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.86B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $68.87 | 4.90x | yes | FCF $436.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $63.86 | 5.28x | yes | SBC-adj FCF $0.40B (FCF $0.44B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $252.00 | 1.34x | yes | EPS $7.81 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $23.86 | 14.14x | yes | BV $42.49 × (ROIC 5.1% / WACC 9.1%) |
| P/Sales Sector | Relative | — | — | no | Revenue $3.33B × sector P/S 4.0x |
| PEG Fair Value | Relative | $235.06 | 1.44x | yes | EPS $7.81 × (PEG 1.5 × growth 20.1% (input: historical EPS growth)) → PE 30.1x |
| Earnings Yield | Earnings | $84.43 | 4.00x | yes | EPS $7.81 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| Proprietary Products | operating | enterprise | $2.5b | $657.2m operating-income | withheld | unresolved no unit value |
| Contract- Manufactured Products | operating | enterprise | $582.0m | $63.4m operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net cash | $228.5m |
| Net debt / NOPAT (after-tax) | -0.41x (net cash) |
| Net debt / operating income (pre-tax) | -0.34x (net cash) |
| Interest coverage | 151.2x |
| Share count CAGR (buyback) | -1.5% |
| Burning cash | no |
Bullet Takeaways
At $327.94 the price works out to roughly 38x company-wide operating income, a multiple that sits at the very top of the peer distribution and implies operating growth held near the self-funding ceiling for about eight years.
The business is the dominant supplier of elastomer components for injectable drugs, and GLP-1 demand has reignited growth. Q1 2026 revenue rose 21% to $845 million, adjusted EPS jumped 47% to $2.13, and management raised full-year guidance.
Management returns capital aggressively while the franchise compounds: a fresh $1 billion buyback was authorized in April on top of a $298 million repurchase, against a net-cash balance sheet. Only the growth-DCF lens reaches the price; the bet is durability the static models cannot capture.
Bull Case
Watch what management does with the cash, because it tells you how it sees the franchise. West holds net cash of about $314 million, generates strong free cash flow, and on April 24 the board authorized a fresh $1 billion buyback, having just completed a $297.65 million repurchase of 1.22 million shares earlier in the month. A company buying back stock this aggressively at roughly 38x operating income is signaling deep conviction in its own compounding, and the dividend, $0.20 a quarter, leaves most of the cash for reinvestment in capacity. That capital allocation rests on a return on equity near 18% against a cost of equity below 10%, with interest coverage near 40x, the profile of a business that earns far more than its capital costs.
The franchise is the kind that earns a durability premium. West's Proprietary Products segment, 81% of the mix, supplies elastomer closures, primary containment, and drug-delivery devices for injectable medicines, the filing describing a range of integrated solutions including analytical lab services, pre-approval packaging support, and regulatory development (FY2025 10-K, accession 0000105770-26-000010). These components are designed into a drug's regulatory filing, so once a stopper or seal is qualified for a specific biologic, switching it requires costly revalidation. That is why competition in this business is based primarily on product design rather than price (FY2025 10-K, accession 0000105770-26-000010). The result is a high-value-product portfolio that compounds with the volume of injectable drugs in the market.
The near-term tape shows the engine re-accelerating. Q1 2026 revenue rose 21% on a reported basis and 15% organically to $845 million, adjusted EPS jumped 47% to $2.13, and management raised full-year guidance to $8.40 to $8.75 of EPS and $3.29 to $3.35 billion of sales, lifting the organic-growth outlook to 7% to 9%. The High Value Products components business grew 23% organically to $409 million, with double-digit growth in both GLP-1 and non-GLP-1 lines, and biologics grew 26% organically. The GLP-1 wave is a structural tailwind: every injectable obesity and diabetes dose needs a qualified containment component, and West is positioned across that demand. Analyst sentiment reflects it, with 10 Buy ratings against 3 Holds and an average target near $350.
Bear Case
The advantage that justifies the premium can erode at the edges, and the price gives that erosion no room. West's moat rests on components being designed into a drug's regulatory filing, but large pharmaceutical customers and contract manufacturers have both the scale and the incentive to qualify second sources or bring some component work in-house, especially as GLP-1 volumes make the spend large enough to attract attention. The filing names competitors ranging from smaller regional players like SMC Ltd. to large global assembly manufacturers such as Phillips Medisize, and notes that cost pressures push customers to seek alternatives (FY2025 10-K, accession 0000105770-26-000010). It also warns that competitive pressure may increase and adversely affect the business (FY2025 10-K, accession 0000105770-26-000010). A moat measured in switching costs weakens every time a customer dual-sources a new molecule.
The valuation is the larger problem because it prices the moat as permanent and accelerating. The multiple sits at the very top of the peer distribution, well beyond the upper quartile, and no static valuation family reaches the price: the earnings-power value lands near $78, the free-cash-flow yield near $71, and the simple excess-return model near $81, all a fraction of the $328 (June 28, 2026) quote. Only the growth-DCF reaches the price, which means the entire premium rests on the assumption that growth holds near its ceiling for about eight years. Historically only about 28% of comparable fast-growers sustained that pace that long.
The GLP-1 tailwind that powers the bull case is also a concentration risk. Demand that surged can normalize, and a company whose recent re-acceleration leans on a single therapeutic wave is exposed if obesity-drug volume growth slows, if manufacturing capacity across the industry catches up with demand, or if a customer shifts to a competing delivery format. The recent history is a caution: West's growth slid before this re-acceleration, and a stock priced for eight years of ceiling-rate compounding has a long way to fall if even one or two of those years disappoint. The fresh $1 billion buyback supports the share count, but buying back stock at the top of the peer multiple is itself a bet that the durability premium holds.
Valuation
Only the growth-DCF lens reaches the price, and that single fact frames the whole valuation. Against the $327.94 quote, the earnings-power value lands near $78, the free-cash-flow yield near $71, the simple excess-return model near $81, the Graham number near $83, and the peer P/E model near $239. The blended X-ray estimate sits near $159. The DCF exit-multiple model reaches the price at about $326, but only by assuming today's elevated EBITDA multiple holds. So the asset, earnings-power, and peer-multiple frames all call the stock richly valued; the price is a bet on durable compounding the static models structurally cannot price.
The inversion measures how big that bet is. At today's level the market pays about 38x company-wide operating income, which the model translates into operating growth held near the 25% self-funding ceiling for about eight years, discounted at a 9.2% cost of capital, where each percentage point of cost moves the implied horizon about two years. The near-term growth rate is within what the company has recently delivered; the stretch is the duration. The peer-multiple context is stark: the multiple sits at the very top of the peer distribution, and historically only about 28% of comparable fast-growers sustained this pace for that long.
The honest characterization is that this is a high-quality, net-cash, high-return franchise trading at a price that requires its moat to deliver near-ceiling growth for the better part of a decade. The premium is earned by the switching-cost economics and the GLP-1 demand wave; whether it is justified depends on how durable both prove. The static models give a sense of the downside if the durability disappoints, and the gap between them and the price is the margin the buyer is underwriting.
Catalysts
The April Q1 2026 report was the catalyst that reset the story: revenue up 21% to $845 million, adjusted EPS up 47% to $2.13, and a full-year guidance raise to $8.40 to $8.75 of EPS on organic growth of 7% to 9%. The High Value Products components line grew 23% organically and biologics 26%, both ahead of the company's prior trajectory. The next earnings report is the key test of whether the GLP-1-driven re-acceleration is durable or a single strong comparison, since the entire valuation rests on multi-year persistence.
Capital return is a concrete near-term catalyst. The board authorized a fresh $1 billion buyback on April 24, on top of the $297.65 million already repurchased in the quarter, which supports EPS while the franchise compounds. Watch capacity: West is investing in manufacturing to meet injectable-component demand, and any commentary on capacity coming online for GLP-1 and biologics volumes would validate the growth runway. Analyst sentiment is firmly positive, with recent upgrades and target raises (Nephron to Buy, T.D. Cowen to $365, Barclays to $310) and an average target near $350. The chief risks to the timeline are a normalization in GLP-1 demand growth, customer dual-sourcing that pressures the high-value mix, and the simple fact that a top-of-peer multiple leaves little room for a soft quarter.
Sources: Benzinga: West lifts guidance after GLP-1-driven Q1 growth; GuruFocus: WST Q1 2026 earnings call highlights; Sahm Capital: WST after $1b buyback plan; TipRanks: WST analyst forecast; 24/7 Wall St: West reclaims its mojo in 2026.
Peer Cohorts (Per Segment, With Filing Citations)
Proprietary Products (reported)
- ATR (AptarGroup, Inc)
- FY2025 10-K: …customers share in the research and development expenses of customer initiated projects. Occasionally, we acquire or license from third parties technologies or products that are in various stages of development. PATENTS AND TRADEMARKS We customarily seek patent and trademark protection for our products and brands. We…
- FY2025 10-K: …We are working with the suppliers of these alternative propellants and our customers to develop new solutions. 7/ATR 2025 Form 10-K Table of Contents Pharma regulatory agencies in the United States and EU have developed and introduced Combination Products specific guidelines for more complex drug delivery products,…
- ICUI (ICU MEDICAL INC/DE)
- FY2025 10-K: …include Edwards Lifesciences, Belmont, Medical Technologies and Intersurgical plc. 12 Our ability to compete in this market will depend on our ability to continue to make technological advances to our products, thereby increasing customer efficiency, and our ability to provide product support and successful customer…
- FY2025 10-K: …the financial status of our customers and other factors to estimate the cash which ultimately will be received. Such amounts cannot be known with certainty at the financial statement date. We regularly review individual past due balances for collectability. Inventories Inventories are stated at the lower of cost or…
- TFX (TELEFLEX INCORPORATED)
- FY2025 10-K: …applications, we cannot be assured that any pending patent applications will issue, or that any patents, issued or pending, will provide us with any competitive advantage or will not be challenged, invalidated or circumvented by third parties. In addition, we rely on confidentiality and non-disclosure agreements with…
- FY2025 10-K: …rapid technological advances characterize the market in which we compete. We must continue to develop and acquire new products and technologies for our businesses to remain competitive. We believe that we compete primarily on the basis of clinical superiority and innovative features that enhance patient benefit,…
- BAX (BAXTER INTERNATIONAL INC)
- FY2025 10-K: …and regional competitors continue to expand their manufacturing capacity and sales and marketing channels. We believe customer purchasing decisions are primarily focused on cost-effectiveness, price, service, product performance and technological innovation. There has been consolidation in our customer base and by…
- FY2025 10-K: …for the Novum LVP and have implemented a voluntary ship and installation hold in the U.S. and Canada, which remains ongoing. New or unintended uses of our products may also raise quality or safety issues. In addition, our customers' use of third parties to service or repair our products has caused, and may in the…
- BDX (BECTON DICKINSON & CO)
- FY2025 10-K: …of possible outcomes, including those with a de minimis value, individual outcomes generally do not impact the value of other cases in the total case inventory or the overall product liability accrual. 81 Table of Contents Notes to Consolidated Financial Statements - (Continued) Becton, Dickinson and Company In view…
- FY2025 10-K: …or quality issues associated with our products and related regulatory actions could adversely affect our results of operations and financial statements. The design, manufacture and marketing of medical devices involve certain inherent risks. Manufacturing or design defects, component failures, unapproved or improper…
Contract- Manufactured Products (reported)
- ITGR (INTEGER HOLDINGS CORPORATION)
- FY2025 10-K: …targets using the most likely amount method and are updated quarterly. Adjustments to these estimates are recognized in the period in which they are identified. When contracts with customers include consideration payable at the beginning of the contract, the transaction price is reduced at the later of when the…
- FY2025 10-K: …to be a separate performance obligation. - 68 - Table of Contents INTEGER HOLDINGS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1.) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable…
- TFX (TELEFLEX INCORPORATED)
- FY2025 10-K: …rapid technological advances characterize the market in which we compete. We must continue to develop and acquire new products and technologies for our businesses to remain competitive. We believe that we compete primarily on the basis of clinical superiority and innovative features that enhance patient benefit,…
- FY2025 10-K: …customers for use of our existing products. Adverse coverage determinations, including reductions in the amount of reimbursement, 14 could harm our business by discouraging customers' selection of, and reducing the prices they are willing to pay for, our products. In addition, as a result of their purchasing power,…
- ICUI (ICU MEDICAL INC/DE)
- FY2025 10-K: Equipment revenue recognized ( 65,792 ) Equipment revenue deferred due to implementation 74,836 Software revenue recognized ( 35,715 ) Software revenue deferred due to implementation 31,373 Government grant income recognized (1) ( 2,066 ) Government grant income deferred - Other deferred revenue recognized ( 1,983 )…
- FY2025 10-K: …on a "where sold" basis, which reflects the revenue within the country or region in which the ultimate sale is made to our external customer. The following table represents our revenues disaggregated by geography (in thousands): 80 ICU MEDICAL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS…
- GEHC (GE HEALTHCARE TECHNOLOGIES INC.)
- FY2025 10-K: …obtains control of the underlying products or services. The Company recognizes a contract with a customer when there is a legally enforceable agreement between the Company and its customer, the rights of the parties are identified, the contract has commercial substance, and collectability of the contract…
- FY2025 10-K: …not reasonably available, we use our best estimate of selling price, which is established consistent with the pricing strategy of the Company and considers product configuration, geography, customer type, and other market-specific factors. Revenue is recognized in the period in which the customer obtains control of…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.