UBS: Gives WuXi Biologics (02269) a "Buy" rating with a target price of HK$142

According to Zhitong Finance APP,UBSA research report was released stating thatWuXi Biologics(02269) has a "Buy" rating with a target price of HK$142, raising its 2021-23 earnings per share forecast by 26% to 38% to reflect stronger-than-expected pandemic and CMO-related projects, and raising its 2020-24 revenue forecast by 11% to reflect stronger-than-expected growth in COVID-19 projects and growth in pharmaceutical manufacturing outsourcing (CMO).

The report stated that, according to management, there will be at least four to five non-COVID-19-related CMOs by the end of 2022, which is expected to drive the company's long-term profit growth. Management will maintain its 2021 guidance, expecting revenue and net profit to increase by 65% year-on-year. The bank believes that if growth is not affected by supply shortages, the company is expected to outperform the guidance.

The bank stated that, according to management, there is currently no evidence that the U.S. government will restrict U.S. companies from using CDMO companies based in China. Meanwhile, 20% of WuXi AppTec's customers have considered using the company's production capacity in Europe and the United States to mitigate risks. Considering the nature of the company's CDMO services, if drugs are produced in Europe and the United States and shipped there, they will not be considered exported from China to the United States, which is believed to reduce the risk of drug supply instability.