Pharmaron rose over 8% in half a day, receiving a target price upgrade from Nomura

Pharmaron (03759.HK) opened up 2.87% today, reaching a high of HKD 20.64. It closed at HKD 20.44 at noon, up 8.61%, with a trading volume of 9.5382 million shares, involving HKD 190 million.

Nomura published a report stating that Pharmaron's performance in the fourth quarter of last year met expectations, with revenue and profit growing by 16% and 41% year-on-year, respectively. Management expects revenue to grow by 12% to 18% year-on-year by 2026, which, based on the midpoint, aligns with market expectations but is higher than Nomura's original estimate. This growth guidance has taken into account exchange rate impacts; otherwise, the actual growth would be 3 percentage points higher.

The firm believes that Pharmaron's CMC business growth will accelerate, and it is confident that the company's efforts to strengthen this business have begun to yield results. Recent investments from Eli Lilly (LLY.US) and orders for oral GLP-1 production support this view. Nomura has raised its revenue and profit forecasts for 2026 by 4.2% and lowered them by 10.5%, respectively.

Nomura maintains a "Buy" rating on Pharmaron and has raised its target price based on a discounted cash flow model from HKD 26.63 to HKD 27.33, assuming a weighted average cost of capital (WACC) of 10% and a terminal growth rate of 4%