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On Monday, JPMorgan analyst Yang Huang adjusted the financial outlook for Wuxi Biologics (2269:HK) (OTC: WXXWY), reducing the price target from HK$32.00 to HK$28.00, while still upholding an Overweight rating for the company’s stock. Despite the target reduction, InvestingPro data shows the stock has demonstrated strong momentum with a 66% return over the past year and appears undervalued based on its Fair Value analysis. The revision was prompted by new U.S. policies aimed at bolstering domestic drug manufacturing.
President Trump signed an executive order on May 5, 2025, to encourage the production of prescription drugs within the United States. The order introduces measures such as expediting FDA approvals for U.S. production sites and raising inspection fees for foreign facilities. The initiative seeks to enhance U.S. national security by lessening the country’s dependence on imported medications. As a prominent player in the Life Sciences Tools & Services industry with a solid financial health score of 3.08 out of 4 according to InvestingPro, Wuxi Biologics maintains a strong position with current ratio of 2.73, indicating robust liquidity.
While the full impact of this executive order on drug manufacturing within the U.S. is yet to be determined, Huang notes that the policy could pose risks to the global Contract Development and Manufacturing Organization (CDMO) market. In light of these potential challenges, JPMorgan has decided to lower their sales projections for Wuxi Biologics for the year 2028 and beyond by 3-14%.
The reduced forecasts are a precautionary response to the anticipated changes in the CDMO landscape. Despite the price target adjustment, JPMorgan’s stance on Wuxi Biologics remains positive. This outlook is consistent with their recent analysis of WuXi AppTec, where they similarly moderated their long-term growth expectations due to the evolving industry conditions.
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