West Pharmaceutical Services, Inc. (WST) Company Bio
West Pharmaceutical Services develops, manufactures, and sells components and systems for the packaging and delivery of injectable drugs, as well as delivery system components for the pharmaceutical, healthcare, and consumer products industries. The company operates through two segments, Pharmaceutical Packaging Systems and Pharmaceutical Delivery Systems. The company was founded in 1923 and is based in Exton, Pennsylvania.
WST Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for West Pharmaceutical Services Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that West Pharmaceutical Services Inc ranked in the 23th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. As for the metrics that stood out in our discounted cash flow analysis of West Pharmaceutical Services Inc, consider:
The company's debt burden, as measured by earnings divided by interest payments, is 42.96; that's higher than 90.53% of US stocks in the Healthcare sector that have positive free cash flow.
The business' balance sheet suggests that 2% of the company's capital is sourced from debt; this is greater than just 7.53% of the free cash flow producing stocks we're observing.
WST's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 51.57% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of West Pharmaceutical Services Inc? See MTD, OFIX, ABT, SRDX, and BAX.
Health care, one of the largest and most complex sectors, is comprised of a broad range of companies that sell medical products and services. The health care sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and health care providers. Health care stocks, as represented by the Health Care Select Sector SPDR ETF (XLV), have outperformed the broader market, providing investors with a total return of 17.0% compared to the S&P 500's total return of 9.0% over the past 12 months. Several of these companies have received U.S. Emergency Use Authorization to develop either tests or treatments for COVID-19, sharply boosting their share price.