Lyon: Maintaining Pharmacovigant's (02359) “Outperform the Market” rating, the target price was raised to HK$143.4

The Zhitong Finance App learned that Lyon released a research report stating that it maintained the “outperforming the market” rating of Yao Ming Kangde (02359) and raised the target price to HK$143.4. Lyon expects that Yao Ming Kant will benefit from a recovery in outsourcing demand and weakening policy uncertainty, and it is expected that profits will increase significantly in 2026.

The report mentioned that in the first quarter of 2026, there are three major catalysts that may drive Pharmaceutical Kangde's stock price performance, including the January 12-15 industry summit, which will update the CRO industry's latest outlook and are expected to boost market confidence. Second, the US Department of Defense's 1260H list was announced between January and February, which is expected to ease the market's unease about the policy. Finally, the company's full-year performance guidance for 2026 in March will further confirm its profit growth potential.

Despite continuing geopolitical headwinds, the backlog of orders in the first three quarters of 2025 increased by 41% year-on-year, higher than the global average of 14%, highlighting its long-term strong competitiveness in the pharmaceutical outsourcing market.

In terms of valuation, Lyon adjusted Yao Ming Kant's target price-earnings ratio to 21 times (originally 22 times to reflect the uncertainty brought about by the 1260H list), which is higher than the historical average from 2022 to 2025, mainly due to the valuation premium brought about by the company's profit growth returning to double digits. Yao Ming Kangde is the bank's preferred stock in the CRO/CDMO industry in China.