Despite A Promising Future For Hutchmed, We Have Concerns About Development Of The Share Price (Rating Downgrade)

2025-01-30 01:39:02 ET

Summary

• Despite a 32% drop in share price, HCM's oncology treatments show potential for growth, with expected revenue increases driving earnings and share price up.
• HCM's sale of a 45% stake in Shanghai Hutchison Pharmaceuticals for $608 million will fund internal product development, enhancing its market position.
• The current share price of $13.56 suggests an attractive valuation with a FWD P/E of 18.1 and an EV/Sales of 2.44.
• However, concerns over poor performance of the share prices of Li family-controlled companies led us to downgrade HCM from Buy to Hold.

Investment thesis

In August last year, we kept our line of Buy calls for HUTCHMED (China) Limited ( HCM ) (HMDCF), on the back of a 64% growth in sales in the first half of 2024....

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