Morgan Stanley maintains a "overweight" rating on Pharmaron Beijing (03759), with a target price lowered to 23.2 Hong Kong dollars.

Morgan Stanley released a research report stating that it has lowered the target price for Pharmaron Beijing (03759) by 3.7%, from HK$24.2 to HK$23.2, while maintaining a "buy" rating. Morgan Stanley stated that it has lowered the 2024 net profit growth forecast for Pharmaron Beijing by 3.3%, decreased by 2.4% for 2025, and increased by 0.4% for 2026. The revenue figures remain largely unchanged, with a slight slowdown in the improvement of overseas business gross profit margin. Adjusted net profit forecasts for 2024-2025 have been revised downward by 3.7%/2.2% to RMB 15.7/18.8 billion respectively, while the forecast for 2026 has been increased by 0.4% to RMB 24.1 billion. Morgan Stanley also adjusted its assumptions for the company's capital expenditures for 2027 and beyond, reducing it from 10-15 billion RMB to just above 10 billion RMB to reflect a brighter mid-term outlook for China's small molecule drug development and manufacturing services (CDMO).