Piper Jaffray Upgrades WuXi PharmaTech (WX) to Buy

July 30, 2008 7:54 AM EDT

Piper Jaffray upgrades WuXi PharmaTech (NYSE: WX) from Neutral to Buy with a $22 price target.

The firm cites an attractive valuation as a reason for the upgrade. First the stock has fallen 18% in the last couple of weeks. Second, according to Piper Jaffray, the company is currently trading at 16x Piper Jaffray’s 2009 non-GAAP EPS and 20x of GAAP EPS, a significant discount to the 20x multiple for its US CRO peers. This considers the one-time, non-cash nature of the GAAP charge (acquisition intangible asset amortization).

The firm also believes there is limited downside risk going into the quarter while long term prospects remain attractive. Piper Jaffray said, "We are expecting $67m top-line revenue and $0.15 non-GAAP EPS for 2Q08, compared to the Street consensus of $68m in revenue and $0.16 in EPS. We expect the company to meet our expectations on the quarter. We continue to believe that the next 6-12 months is a critical period of time for WX to execute its rapid expansion strategy and fully mature as a leader in the China CRO industry."

WuXi PharmaTech (Cayman) Inc. (WuXi) is a pharmaceutical, biotechnology and medical device research and development (R&D) outsourcing company, with operations in China and the United States.

Related Categories

Upgrades

Stocks Mentioned

Related Entities

• Piper Jaffray

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?