WuXi PharmaTech 2Q profit rises 19 percent

WuXi PharmaTech Inc., which provides research and development outsourcing for the pharmaceutical and biotechnology sectors, reported Thursday its second-quarter profit rose 19 percent as its revenue more than doubled.

The company earned $8.5 million, or 12 cents per American Depositary Share, compared with $7.1 million, or 11 cents per ADS, a year ago. WuXi had more than doubled its ADS outstanding during the most recent period. WuXi said its adjusted profit was 21 cents per ADS.

Revenue soared to $70.8 million from $30.2 million.

Analysts polled by Thomson Financial expected a profit of 14 cents per share on revenue of $68.3 million, on average.

Laboratory services revenue rose 80 percent to $45.2 million while manufacturing services rose fivefold to $25.6 million.

However, the company's profit margin fell by more than half to 11 percent from 25 percent on acquisition costs, the company said.

Oppenheimer & Co. analyst Charles Rhyee reaffirmed a "Perform" rating on the stock, calling the results confusing as the company included a series of adjustments and one-time tax credits. He placed the actual adjusted profit closer to 14 cents per ADS

"Lab services revenue and margins remain solid, but overall gross margin was impacted by weakening margins in the core WuXi manufacturing operations," he said, in a note to investors. "Long term, we believe WuXi should benefit from increasing outsourcing trends to China, but remain cautious over the near to medium term."

WuXi, headquartered in Shanghai, China, and incorporated in the Cayman Islands, reaffirmed its full-year revenue outlook for $280 million to $300 million, while analysts expect revenue of $285 million.

American Depository Shares of WuXi fell 23 cents too $19.07 in morning trading.