Update: WuXi PharmaTech Exceeds Earnings Estimates For Q2

| About: WuXi PharmaTech (WX)

Summary

WuXi PharmaTech exceeded expectations for both revenue and earnings - guidance was raised for FY14.

This reinforces my positive outlook on the company as it continues to show strength.

I pointed out in my previous article that WuXi is likely to achieve above average stock gains as earnings growth increases at an above average rate.

WuXi PharmaTech (NYSE:WX) exceeded its earnings estimates for both revenue and earnings for Q2 2014. Revenue increased 14.8% to $163.4 million, beating estimates by $1.29 million. EPS increased 5.2% to $0.49, beating estimates by over 4%. The revenue growth was driven by small-molecule manufacturing and biologics. Segment revenue growth for Manufacturing Services, China Lab Services, and U.S. Lab Services, increased 19.3%, 14.2%, and 9.6% respectively. This performance reinforces my positive outlook for the company.

WuXi also raised its revenue and earnings guidance for 2014. The company now expects revenue to be between $665 million - $670 million, up from previous estimates of $660 million - $670 million. Non-GAAP diluted EPS is expected to be $1.82 - $1.86, up from previous guidance of $1.80 - $1.85. This increase in guidance is likely to provide a catalyst for the stock until the current quarter's earnings are reported.

I pointed out in my previous article on the company that WuXi's stock was likely to increase on its earnings upgrades in 2013 and as the company grows earnings at an above average rate. The stock is up about 50% from the time that article was written. The company is upgrading its earnings guidance again for 2014, so I would expect more strong increases in the stock price if these estimates are met. WuXi's subsidiary Shanghai SynTheAll Pharmaceutical Company just passed FDA inspection in July to manufacturer the active pharmaceutical ingredient (API) for a branded commercial drug. The company's strong performance and continual investments for sustaining growth are likely to catalyze the stock going forward.

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