Let’s dig into the relative performance of Azenta (NASDAQ: AZTA) and its peers as we unravel the now-completed Q2 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 Q2. As a group, revenues beat analysts’ consensus estimates by 4.4%.

Luckily, drug development inputs & services stocks have performed well with share prices up 13.3% on average since the latest earnings results.

Weakest Q2: 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 $143.9 million, flat year on year. This print fell short of analysts’ expectations by 3.8%. Overall, it was a softer quarter for the company with some shareholders anticipating a better outcome.

"We've made significant changes across the organization and our operational turnaround is progressing as planned. Despite a challenging macro environment, we drove meaningful margin expansion through disciplined cost management and focused execution," said John Marotta, President and CEO.

Azenta delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 5.1% since reporting and currently trades at $30.76.

Read our full report on Azenta here, it’s free.

Best Q2: 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 $766.5 million, up 9.2% year on year, outperforming analysts’ expectations by 5.6%. The business had a stunning quarter with a solid beat of analysts’ full-year EPS guidance estimates and full-year revenue guidance exceeding analysts’ expectations.

The market seems happy with the results as the stock is up 8.7% since reporting. It currently trades at $247.21.

Is now the time to buy West Pharmaceutical Services? Access our full analysis of the earnings results here, it’s free.

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 $151.2 million, up 37.2% year on year, in line with analysts’ expectations. Still, it was a satisfactory quarter as it posted a beat of analysts’ EPS estimates.

As expected, the stock is down 2.3% since the results and currently trades at $220.94.

Read our full analysis of UFP Technologies’s results here.

Medpace (NASDAQ: MEDP)

Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ: MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.

Medpace reported revenues of $603.3 million, up 14.2% year on year. This result beat analysts’ expectations by 11.3%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ organic revenue estimates and full-year EBITDA guidance exceeding analysts’ expectations.

Medpace delivered the highest full-year guidance raise among its peers. The stock is up 48.8% since reporting and currently trades at $459.55.

Read our full, actionable report on Medpace here, it’s free.

Fortrea (NASDAQ: FTRE)

Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.

Fortrea reported revenues of $710.3 million, up 7.2% year on year. This print topped analysts’ expectations by 12%. It was a stunning quarter as it also recorded a beat of analysts’ EPS estimates and full-year revenue guidance exceeding analysts’ expectations.

Fortrea pulled off the biggest analyst estimates beat among its peers. The stock is up 36.7% since reporting and currently trades at $8.99.

Read our full, actionable report on Fortrea here, it’s free.

Market Update

In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.

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