Let’s dig into the relative performance of Azenta (NASDAQ:AZTA) 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 7.2% on average since the latest earnings results.
Slowest Q1: 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. This print exceeded analysts’ expectations by 2%. Despite the top-line beat, it was still a slower quarter for the company with a significant miss of analysts’ EPS estimates.
"We delivered another quarter of strong performance in an evolving and uncertain macroeconomic environment. Our performance in the second quarter and first half of our fiscal year demonstrates the resilience of our portfolio and the dedication of our teams that focus on our customers with our clearly differentiated products and services," said John Marotta, President and CEO.
Interestingly, the stock is up 26.2% since reporting and currently trades at $32.08.
Read our full report on Azenta 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 an impressive 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 15.6% since reporting. It currently trades at $228.
Is now the time to buy UFP Technologies? Access our full analysis of the earnings results here, it’s free.
Repligen (NASDAQ:RGEN)
With over 13 strategic acquisitions since 2012 to build its comprehensive bioprocessing portfolio, Repligen (NASDAQ:RGEN) develops and manufactures specialized technologies that improve the efficiency and flexibility of biological drug manufacturing processes.
Repligen reported revenues of $169.2 million, up 10.4% year on year, exceeding analysts’ expectations by 3%. It was a satisfactory quarter as it also posted a solid beat of analysts’ organic revenue estimates but a miss of analysts’ full-year EPS guidance estimates.
As expected, the stock is down 16% since the results and currently trades at $120.77.
Read our full analysis of Repligen’s results here.
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 result beat analysts’ expectations by 2%. It was a very strong quarter as it also recorded an impressive beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.
The stock is up 3.1% since reporting and currently trades at $224.38.
Read our full, actionable report on West Pharmaceutical Services here, it’s free.
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 topped analysts’ expectations by 4.6%. Overall, it was an exceptional quarter as it also logged 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 34.3% since reporting and currently trades at $154.94.
Read our full, actionable report on Charles River Laboratories here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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