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On Thursday, JPMorgan analyst Yang Huang upgraded WuXi AppTec Co Ltd (603259:CH) stock from Neutral to Overweight, while adjusting the price target to RMB77.00 from RMB82.00. This change follows the company’s first-quarter 2025 results, which Huang described as a "clean beat" on both the top and bottom lines. WuXi AppTec’s performance was noted for its impressive execution amidst a challenging external environment.
In response to the earnings report and subsequent results call, JPMorgan has increased its near-term sales and net profit estimates for WuXi AppTec. The company’s solid momentum and efficiency improvements were cited as the basis for the revised estimates. Despite broader market concerns, such as potential US tariffs on pharmaceuticals and the impact of multinational corporations (MNCs) developing their own manufacturing capacities in China, Huang believes these risks are already accounted for in WuXi AppTec’s current share price.
WuXi AppTec’s shares have experienced a decline of approximately 12% since Liberation Day, which is a steeper drop compared to the roughly 5% fall in the MSCI China Healthcare Index. JPMorgan suggests that MNCs may postpone their onshore investments until there is clearer visibility regarding the potential U.S. tariffs on pharmaceuticals.
Even with a more cautious approach, which includes lowered long-term sales estimates and non-IFRS Gross Profit Margin (GPM), JPMorgan’s updated price targets still indicate a significant potential upside for WuXi AppTec’s shares from their current levels. Huang’s commentary reflects a positive outlook for the company, despite the recent price target reduction.
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