Morgan Stanley: WuXi AppTec — Raising 2026–30 Earnings Estimates 3–4% on 1Q26 Results
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Following WuXi AppTec's (603259.SS) stronger-than-expected 1Q26 results, Morgan Stanley has raised its 2026–30 earnings estimates by 3–4% to reflect higher revenue and gross margin assumptions. The target price increases from Rmb135.00 to Rmb145.00, with the bull-case scenario moving from Rmb185.00 to Rmb190.00 and the bear-case scenario from Rmb43.00 to Rmb45.00. The firm maintains an Overweight rating and designates the stock as a Top Pick.
Morgan Stanley underscores that WuXi AppTec is China's largest and most robust small-molecule CDMO. Its integrated CRDMO and CTDMO platform model, combined with industry-leading technical capabilities and a global footprint, provides clear medium- to long-term growth visibility. The company leads domestic competitors in early-stage project volume, supporting a sustained project inflow pipeline.
At the current share price of Rmb100.52, the stock trades at approximately 17 times forward 2026 estimated earnings. This valuation appears attractive relative to a projected 14% adjusted non-IFRS earnings CAGR from 2025 to 2028. The base-case scenario assumes a 15% revenue CAGR over the same period, driven by WuXi Chemistry at 18%, WuXi Testing at 10%, and WuXi Biology at 11%. Meanwhile, the bull case anticipates a revenue CAGR exceeding 20%. Key downside risks include talent attrition, margin pressure in US operations, intellectual property protection challenges, and geopolitical tensions.