West Pharmaceutical Services (NYSE: WST) saw its shares tumble by 5.01% on Thursday, despite reporting better-than-expected revenue in its third-quarter 2024 earnings. The healthcare company's stock price decline was driven by a significant miss in earnings and profitability compared to the prior year, exacerbated by ongoing destocking challenges with some customers.

For the quarter ended September 30, 2024, West Pharmaceutical reported revenue of $746.9 million, flat compared to the same period in 2023 but exceeding analyst estimates by 5.3%. However, the company's net income plunged 16% year-over-year to $136.0 million, while its profit margin contracted from 22% to 18%. Earnings per share also declined to $1.87, missing analysts' expectations by a substantial margin.

According to the company's earnings call, West Pharmaceutical is facing destocking pressures from customers, particularly in the biologics and generics segments. This inventory destocking by customers has weighed on the company's performance, leading to the significant decline in profitability compared to the previous year. While the company maintains a strong position in the fast-growing biologics market and is making investments to increase capacity, the destocking challenges are expected to persist into early 2025, potentially continuing to impact financial results in the near-term.