4. China-based ShangPharma (SHP) is engaged in pharmaceutical and biotechnology research and development outsourcing.
For full year 2010, the company expects net revenues to reach $89.6-$91.1 million, a 24%-26% year-over-year growth, while GAAP gross profit is expected to register a 24%-28% year-over-year growth rate. Gross margins are anticipated in the range of 34.4%-34.8%, compared to the 33.2% margin reported for 2009, backed by favorable service mix, improved labor cost control, prudent material use and improved operational efficiency.
During the past 12 months, the return-on-equity was 48.7%, surpassing competitors. Covance (CVD), Pharmaceutical Product Development (PPDI), Charles River Laboratories (CRL), ICON plc (ICLR) and WuXi PharmaTech (WX) have ROEs of 5.1%, 12.6%, 8.7%, 17.4% and 20.7%, respectively.
The stock is currently trading at a forward price-to-earnings multiple of 14.2. All the 6 analysts covering the stock recommend buying and estimate the stock to gain around 25% over the next 12 months with a consensus target price of $16.3.
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