As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at drug development inputs & services stocks, starting with UFP Technologies (NASDAQ:UFPT).
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 mixed Q4. As a group, revenues beat analysts’ consensus estimates by 0.8%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 17.9% since the latest earnings results.
UFP Technologies (NASDAQ:UFPT)
Founded in 1963, UFP Technologies (NASDAQ:UFPT) designs and manufactures medical products, sterile packaging, and other highly-engineered custom products for healthcare settings.
UFP Technologies reported revenues of $144.1 million, up 41.9% year on year. This print exceeded analysts’ expectations by 1.7%. Overall, it was a strong quarter for the company with a decent beat of analysts’ EPS estimates.
“I am very pleased with our fourth quarter and full-year 2024 results,” said R. Jeffrey Bailly, Chairman & CEO.
UFP Technologies Total Revenue
UFP Technologies achieved the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 13.5% since reporting and currently trades at $208.02.
Founded as a small biotech firm, Azenta (NASDAQ:AZTA) provides services for life sciences research and biopharmaceutical applications such as sample management, cold chain logistics, and storage services.
Azenta reported revenues of $147.5 million, up 4.1% year on year, outperforming analysts’ expectations by 1.1%. The business had a very strong quarter with an impressive beat of analysts’ EPS estimates.
Azenta Total Revenue
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 29.2% since reporting. It currently trades at $36.80.
Spun off from Labcorp in 2023, Fortrea Holdings (NASDAQ:FTRE) provides contract research and development services for pharmaceutical and biotechnology companies, specializing in clinical trials, laboratory services, and data management.
Fortrea reported revenues of $697 million, down 1.8% year on year, falling short of analysts’ expectations by 0.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
Fortrea delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update in the group. As expected, the stock is down 56.6% since the results and currently trades at $6.01.
Founded in 1923, West Pharmaceutical Services (NYSE:WST) develops innovative injectable drug packaging and delivery solutions, focusing on safe and effective medication containment.
West Pharmaceutical Services reported revenues of $748.8 million, up 2.3% year on year. This result surpassed analysts’ expectations by 1.2%. More broadly, it was a softer quarter as it logged full-year revenue guidance missing analysts’ expectations significantly and a significant miss of analysts’ full-year EPS guidance estimates.
The stock is down 30.6% since reporting and currently trades at $223.98.
Founded in 1947, Charles River Laboratories (NYSE:CRL) provides laboratory services related to drug discovery, development solutions, and safety assessments for pharmaceutical and biotechnology companies.
Charles River Laboratories reported revenues of $1.00 billion, down 1.1% year on year. This print beat analysts’ expectations by 2.3%. Taking a step back, it was a mixed quarter as it also logged a solid beat of analysts’ organic revenue estimates but a miss of analysts’ full-year EPS guidance estimates.
Charles River Laboratories delivered the biggest analyst estimates beat among its peers. The stock is up 10.3% since reporting and currently trades at $170.19.
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