Key Takeaways:
Morgan Stanley raised its outlook on WuXi AppTec (02359.HK), predicting the stock will rise over the next 30 days after the company posted a 39 percent year-over-year revenue increase for the first quarter.
"The latest results increase the likelihood of growth exceeding this range," the bank said in a research report, referring to the company's official guidance. Morgan Stanley assigned an "Overweight" rating to WuXi AppTec’s H-shares with a price target of HKD155, estimating a 70 to 80 percent probability that the company will beat its annual growth targets.
The bullish forecast was driven by first-quarter results that exceeded analyst forecasts by 15 to 20 percent. Revenue from continuing operations climbed 39 percent while profit rose 27 percent from the prior year, primarily driven by an 80 percent surge in revenue from the small molecule D&M business. As a leading indicator of future performance, the company’s order backlog grew 24 percent year-over-year to RMB60 billion.
The strong performance prompted WuXi AppTec to raise its full-year revenue growth guidance for its TIDES business to 40 percent, up from less than 30 percent previously. The results add to a series of bullish analyst notes, with CLSA naming the company a sector top pick and assigning an "Outperform" rating with a HKD149.3 target. Nomura also maintained a "Buy" rating with a HKD157.07 target, citing the exceptional quarterly results.
The upgraded guidance suggests management expects strong momentum to continue, particularly in high-growth areas like the TIDES oligonucleotide and peptide business. Investors will watch the company's next earnings report to see if the accelerated growth can be sustained.
This article is for informational purposes only and does not constitute investment advice.
