UBS upgraded CSPC Pharmaceutical Group Ltd. (1093.HK) to Buy from Neutral, citing the company’s undervalued leadership in artificial intelligence-aided drug discovery (AIDD) while maintaining a price target of HKD 10.9.
"CSPC PHARMA’s leadership in frontier technologies such as AI has not been fully reflected in its valuation," UBS said in a research report. The bank noted that as a series of out-licensing deals are executed, downside risks in its traditional business have been largely priced in.
The bank highlighted that CSPC has secured four licensing or collaboration agreements for its AIDD platform with a cumulative value of $27.7 billion, making it the world's largest licensor in the space. A collaboration with AstraZeneca PLC validates the platform's value. UBS said the stock's current price is equivalent to 10.9 times its 2027 forecast price-to-earnings ratio, far below the 26.7 times average for its China biopharma peers.
Shares of CSPC Pharma jumped more than 6% on the news. The upgrade comes ahead of several expected catalysts, including the announcement of first-quarter 2026 results on May 27 and upcoming clinical data readouts for key pipeline assets such as SYS6010 and KN026.
While UBS lowered its revenue forecast for the current year by 10% due to a timing adjustment for an upfront payment from the AstraZeneca deal, it raised revenue forecasts for the following two years by 12% and 4%, respectively. The bank revised its earnings-per-share forecasts for this year and next year to RMB 0.61 and RMB 0.59.
The rating change suggests UBS sees significant upside potential driven by the company's AI platform, which could re-rate the stock closer to its peers. Investors will be watching for the execution of its licensing deals and upcoming clinical data to confirm the thesis.
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