Drug Development Inputs & Services Stocks Q1 Results: Benchmarking West Pharmaceutical Services (NYSE:WST)

Let’s dig into the relative performance of West Pharmaceutical Services (NYSE:WST) and its peers as we unravel the now-completed Q1 drug development inputs & services earnings season.

Companies specializing in drug development inputs and services play a crucial role in the pharmaceutical and biotechnology value chain. Essential support for drug discovery, preclinical testing, and manufacturing means stable demand, as pharmaceutical companies often outsource non-core functions with medium to long-term contracts. However, the business model faces high capital requirements, customer concentration, and vulnerability to shifts in biopharma R&D budgets or regulatory frameworks. Looking ahead, the industry will likely enjoy tailwinds such as increasing investment in biologics, cell and gene therapies, and advancements in precision medicine, which drive demand for sophisticated tools and services. There is a growing trend of outsourcing in drug development for nimbleness and cost efficiency, which benefits the industry. On the flip side, potential headwinds include pricing pressures as efforts to contain healthcare costs are always top of mind. An evolving regulatory backdrop could also slow innovation or client activity.

The 8 drug development inputs & services stocks we track reported a very strong Q1. As a group, revenues beat analysts’ consensus estimates by 4%.

Thankfully, share prices of the companies have been resilient as they are up 6.3% on average since the latest earnings results.

West Pharmaceutical Services (NYSE:WST)

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.

West Pharmaceutical Services reported revenues of $698 million, flat year on year. This print exceeded analysts’ expectations by 2%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.

Eric M. Green, President, Chief Executive Officer and Chair of the Board, commented: "I am pleased to report we delivered a solid first quarter as both revenues and adjusted-diluted EPS exceeded our first quarter guidance. We are capitalizing on areas of strength and making progress to improve margins and returns on invested capital. As such, we expect our positive trends to continue and remain confident in our ability to execute and achieve our guidance. We are closely monitoring potential impacts, both political and macroeconomic, in order to react as quickly as possible with offsetting mitigating measures. Our team continues to enable the success of our customers and deliver value for all of our stakeholders."

Interestingly, the stock is up 1.3% since reporting and currently trades at $220.41.

Is now the time to buy West Pharmaceutical Services? Access our full analysis of the earnings results here, it’s free.

Best Q1: UFP Technologies (NASDAQ:UFPT)

With expertise dating back to 1963 in specialized materials and precision manufacturing, UFP Technologies (NASDAQ:UFPT) designs and manufactures custom solutions for medical devices, sterile packaging, and other highly engineered products for healthcare and industrial applications.

UFP Technologies reported revenues of $148.1 million, up 41.1% year on year, outperforming analysts’ expectations by 5.9%. The business had an incredible quarter with a solid beat of analysts’ EPS estimates.

UFP Technologies scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 17.3% since reporting. It currently trades at $231.20.

Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free.

Azenta (NASDAQ:AZTA)

Serving as the guardian of some of medicine's most valuable materials, Azenta (NASDAQ:AZTA) provides biological sample management, storage, and genomic services that help pharmaceutical and biotechnology companies preserve and analyze critical research materials.

Azenta reported revenues of $143.4 million, up 5.2% year on year, exceeding analysts’ expectations by 2%. Still, it was a slower quarter as it posted a significant miss of analysts’ EPS estimates.

Interestingly, the stock is up 25.5% since the results and currently trades at $31.91.

Read our full analysis of Azenta’s results here.

Charles River Laboratories (NYSE:CRL)

Named after the Massachusetts river where it was founded in 1947, Charles River Laboratories (NYSE:CRL) provides non-clinical drug development services, research models, and manufacturing support to pharmaceutical and biotechnology companies.

Charles River Laboratories reported revenues of $984.2 million, down 2.7% year on year. This print surpassed analysts’ expectations by 4.6%. It was an exceptional quarter as it also produced a solid beat of analysts’ organic revenue estimates and an impressive beat of analysts’ full-year EPS guidance estimates.

Charles River Laboratories had the slowest revenue growth among its peers. The stock is up 33.3% since reporting and currently trades at $153.69.

Read our full, actionable report on Charles River Laboratories here, it’s free.

IQVIA (NYSE:IQV)

Created from the 2016 merger of Quintiles (a clinical research organization) and IMS Health (a healthcare data specialist), IQVIA (NYSE:IQV) provides clinical research services, data analytics, and technology solutions to help pharmaceutical companies develop and market medications more effectively.

IQVIA reported revenues of $3.83 billion, up 2.5% year on year. This result topped analysts’ expectations by 1.5%. Overall, it was a strong quarter as it also logged full-year revenue guidance beating analysts’ expectations and a solid beat of analysts’ constant currency revenue estimates.

IQVIA achieved the highest full-year guidance raise but had the weakest performance against analyst estimates among its peers. The stock is up 3.4% since reporting and currently trades at $157.67.

Read our full, actionable report on IQVIA here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

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