Here's Why West Pharmaceutical Services (WST) Stock Fell 38%

Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as West Pharmaceutical Services, Inc. (NYSE:WST). West Pharmaceutical Services, Inc. (NYSE:WST) designs, manufactures, and sells containment and delivery systems for injectable drugs and healthcare products. The one-month return of West Pharmaceutical Services, Inc. (NYSE:WST) was -4.41%, and its shares lost 42.94% of their value over the last 52 weeks. On May 1, 2025, West Pharmaceutical Services, Inc. (NYSE:WST) stock closed at $210.26 per share with a market capitalization of $15.11 billion.

Conestoga Capital Advisors stated the following regarding West Pharmaceutical Services, Inc. (NYSE:WST) in its Q1 2025 investor letter:

"After being a leader in Q4 on optimism that destocking in the industry was nearly complete, West Pharmaceutical Services, Inc. (NYSE:WST) declined during the quarter. Most of the decline was confined to the day they announced their fourth quarter earnings, which sent shares down 38%, the company’s largest single-day move in the company’s 40+ years of being publicly traded. Fourth quarter results beat street estimates, but 2025 earnings per share guidance were 22% below expectations. WST announced they’re walking away from two large contract manufacturing customers (20% of that segment’s revenue), and the ramp of SmartDose is going slower than expected. Additionally, WST is reconsidering its path forward with that product."

West Pharmaceutical Services, Inc. (NYSE:WST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held West Pharmaceutical Services, Inc. (NYSE:WST) at the end of the fourth quarter, compared to 31 in the third quarter. West Pharmaceutical Services, Inc. (NYSE:WST) generated net sales of $698 million in the first quarter, representing an organic sales increase of 2.1%. While we acknowledge the potential of West Pharmaceutical Services, Inc. (NYSE:WST) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered West Pharmaceutical Services, Inc. (NYSE:WST) and shared the list of worst performing stocks in the S&P 500 so far in 2025. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.