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WuXi PharmaTech Q1 Results Top View; Backs 2012 Outlook

Chinese research and development outsourcing company WuXi PharmaTech (Cayman), Inc. (WX) reported Thursday a profit for the first quarter that increased from last year, reflecting strong double-digit revenue growth, despite lower margins.

Both adjusted earnings per share and quarterly revenues topped analysts' expectation. The company also provided revenue guidance for the second quarter, above Street view, and reaffirmed revenue forecast for the full-year 2012.

"WuXi began 2012 with a strong first quarter, achieving 26.2% revenue growth. This strong revenue growth was broad-based across all of our businesses. We met or exceeded all of our financial targets for revenues and margins for the quarter," Chairman and CEO Dr. Ge Li said in a statement.

The Shanghai, China-based company reported net income of $20.99 million or $0.28 per ADS for the first quarter, higher than $18.22 million or $0.24 per ADS in the prior-year quarter.

Excluding items, adjusted net income for the quarter increased about15 percent to $24.47 million or $0.33 per ADS from $21.38 million or $0.29 per ADS in the year-ago quarter.

On average, four analysts polled by Thomson Reuters expected the company to earn $0.27 per share for the quarter. Analysts estimates typically exclude special items.

Total net revenues for the quarter increased 26.2 percent to $118.03 million from $93.56 million in same quarter last year, and topped nine Wall Street analysts' consensus estimate of $114.20 million.

Laboratory services net revenues grew 23.2 percent to $86.6 million, with China-based revenues growing 25.8 percent and U.S.-based revenues increasing 16.4 percent. Manufacturing services net revenues rose 35.0 percent to $31.4 million from last year.

"China is becoming an important hub for pharmaceutical R&D in part because of China's pharmaceutical market, already the third largest in the world and growing very rapidly. By building high-quality operations to better serve our customers, WuXi has become the leader in the Chinese pharmaceutical R&D services industry," Li added.

Operating margin declined 370 basis points to 17.5 percent, reflecting a 160 basis points decline in gross margin and higher operating expenses.

Looking ahead to the second quarter, the company expects total revenues in a range of $124 million to $129 million, with analysts estimating revenues of $118.03 million.

For fiscal 2011, the company continues to expect total net revenues between $468 million and $488 million, with Street currently looking for full-year revenues of $477.62 million.

"We are well-positioned to take full advantage of the significant long-term trend for increasing outsourcing of pharmaceutical research and development," Li said.

WX closed Thursday's regular trading session at $13.41, down $0.21 or 1.54% on a volume of 0.41 million shares. However, the stock gained $0.59 or 4.40% in after-hours trading.

by RTTNews Staff Writer

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