WuXi AppTec wins US court injunction as CLSA flags 25% backlog

WuXi AppTec shares rose 3.6 percent after a US court blocked its 1260H military designation, a ruling CLSA called a short-term positive for the stock.

"The injunction has temporarily removed this negative overhang, which should help support market sentiment," CLSA said in a report. "It should also further strengthen the confidence of global pharmaceutical and biotech clients in maintaining long-term partnerships with high-quality Chinese CRDMO companies."

US District Chief Judge James Boasberg granted the preliminary injunction barring the Department of Defense from enforcing the designation while the company's lawsuit proceeds. The court required only $1 in security and denied the DoD's request to stay the injunction pending appeal. WuXi AppTec's backlog for continuing operations reached 66.43 billion yuan (approximately $9.8 billion) as of end-June, up 25.2 percent year-over-year.

The ruling is only a procedural suspension rather than a final legal victory, CLSA said, and the US government may still file an appeal. August 14 is the deadline for federal defendants to submit their response, which will indicate how aggressively the DoD intends to defend the case. The DoD has not indicated whether it will appeal to the US Court of Appeals for the District of Columbia Circuit, representing the most immediate binary risk.

The injunction only addresses the interim period. Subsequent summary judgment or final rulings will determine whether WuXi AppTec will be permanently removed from the list.

The court victory follows a strong first half, with WuXi AppTec reporting revenue of 28.9 billion yuan (approximately $4.3 billion), up 38.93 percent year-over-year, and raising its full-year revenue guidance to 58.5-60.5 billion yuan. Jefferies raised its price target on the A-shares to 165 yuan and its H-share target to HK$210, while CICC lifted its A-share target by 28.5 percent to 167 yuan.

The injunction removes a significant negative overhang on the stock in the near term, supporting market sentiment. Investors will watch the August 14 deadline for the DoD's response, which will signal how aggressively the Pentagon intends to defend the listing.

This article is for informational purposes only and does not constitute investment advice.