Time To Root For Chinese Drug & Biotech? (WX)
Much of the cheer and fanfare has been vacant at many drug and biotech firms for some time, despite the notion that there have been many mergers in the group. This particularly the case for some of the emerging companies or the ones located in lesser known areas for investors in this sector. That is where Wuxi PharmaTech, Inc. (NYSE: WX) comes into play.
We just saw earnings last night, and there have been two analyst upgrades this morning. This one has been battered an tattered over the last year, even if you take into consideration the notion that this one has recovered 100% from the market lows in early March.
Wuxi has operations in the pharmaceutical, biotechnology, and medical device R&D outsourcing in China and the United States. This one has been public in the U.S. for less than two years and its market cap is just above $500 million after today’s huge gain.
Yesterday’s earnings data was the start of the news flow. WuXi’s Q1-2009 net revenues rose by 5% to $59.1 million. Its GAAP earnings were $0.16 EPS and non-GAAP earnings were $0.20 EPS. Lab services grew by 33% to $56.5 million in sales (including an acquisition) and its China-based lab services grew 28% to $41.6 Million.
As far as what lies ahead, it reconfirmed its 2009 guidance for 15% to 20% growth in its China-based laboratory services. It also gave guidance of revenues of $265 million to $275 million in revenues, but said that it sees second-quarter revenues to grow 8% to 10% from first-quarter revenues. WuXi noted that manufacturing would be lower and earnings would be lower as it invests in new capabilities and capacities.
The analysts decided enough was enough here. Oppenheimer and Credit Suisse decided it was time to pile in. Both firms raised the rating to “Outperform.”
This stock is up big by about 40% this morning at $8.00 after an hour of trading. Chasing 40% gainers can be tricky, but this might be one of those cases to add to a watch list in case it gets any real pullback in the coming days and weeks.
With a $3.67 to $23.39 range of the last 52-weeks and the notion that it hit $40 briefly after its IPO in late 2007, some may think there is room for this one to run much higher.
Jon C. Ogg
May 15, 2009
