Yuhan Corporation (000100.KS) had its target price cut due to the absence of European milestone payments. While the company defended its earnings, the delay in key pipeline events weighed on investor sentiment.
Meritz Securities on Thursday maintained a "buy" rating on Yuhan Corp. but lowered its target price to 140,000 won. The revision reflects valuation pressure stemming from delayed milestone inflows from the European region compared to earlier expectations.
First-quarter consolidated revenue rose 7.2% year-on-year to 526.8 billion won ($387 million), though it fell 3.5% from the previous quarter. Operating profit remained in the black at 8.8 billion won but missed market expectations. The shortfall largely reflected the deferral to the second quarter of a milestone payment of approximately $30 million tied to the European approval of lazertinib (Leclaza).
Profitability showed signs of improvement. Gross margin rose to 74.1% on a lower cost-of-goods-sold ratio. However, rising research and development expenses and cost burdens from the expansion of new drug pipelines persisted, limiting the scope of earnings improvement.
By business segment, overseas operations showed growth momentum. In particular, SourceCure, a U.S.-based biopharmaceutical contract development and manufacturing organization (CDMO) subsidiary, has entered the commercialization stage, expanding its earnings contribution. Yuhan's Hwaseong plant is also preparing for operations targeted for the first half of 2026.
The issue lies in key new drug events. With the global expansion of lazertinib progressing more slowly than expected, the delayed timing of milestone receipts linked to European approval has weakened short-term momentum. In fact, first-quarter Leclaza prescription sales declined from the previous quarter, and the inflow of new patients also slowed, according to the analysis.
Still, the medium- to long-term growth outlook remains intact. Alongside the potential expansion of additional indications for lazertinib, follow-on pipelines including a MASH treatment (YH25724) and an allergy treatment have entered clinical stages, diversifying the growth axis. In particular, the company is pursuing business expansion strategies through new technology licensing in parallel with global clinical trials.
"In the short term, earnings momentum has weakened due to the milestone delay and prescription decline, but there is potential for a rebound from the announcement of major clinical results in the second half of 2026," Meritz Securities said. "It is necessary to focus on the medium- to long-term pipeline value."
