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."
A closeup of multiple drug containment systems in an array of colors.
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.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
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