The Inflection Confirmed: Margin Recovery Accelerates#

Gross Margin Surprise Reverses Prior Skepticism#

The most consequential aspect of West Pharmaceutical Services' third-quarter earnings release lies not in revenue growth—which modestly exceeded guidance at 7.7% reported and 5.0% organic—but rather in the profound reversal of margin compression that had shadowed investor sentiment through the prior three quarters. The company posted third-quarter gross margin of 36.6%, representing a 120-basis-point expansion versus the prior-year period, directly contradicting consensus forecasts for continued margin pressure stemming from tariff impact and labour cost inflation at European manufacturing facilities. This gross margin outperformance signals that management's assertion that margin compression was cyclical rather than structural has now been validated with hard financial evidence.