Zai Lab Ltd (9688) AI Stock Analysis

• Market Cap: HK$15.32B
• Dividend Yield: N/A
• Average Volume (3M): 10.12M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.22
• Revenue Growth: 23.87%
• EPS Growth: 30.08%
• Country: US
• Employees: 1,869
• Sector: Healthcare
• Sector Strength: 45
• Industry: Biotechnology
• EPS (TTM): -0.26
• Shares Outstanding: 1,119,628,000
• 10 Day Avg. Volume: 10,854,931
• 30 Day Avg. Volume: 10,116,373
• PEG Ratio: 0.11
• Price to Book (P/B): 3.16
• Price to Sales (P/S): 6.67
• P/FCF Ratio: -9.63
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$30.64
• Price Target Upside: 38.14% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 42 Neutral
• Price Target: HK$13.50 ▼(-39.13% Downside)

Zai Lab Ltd's overall stock score is primarily impacted by its financial performance and technical analysis. The company faces significant profitability and cash flow challenges, which are reflected in its negative P/E ratio. The stock is also experiencing bearish momentum, trading below key moving averages with oversold technical indicators. These factors contribute to a cautious outlook for the stock.

Positive Factors

Healthy gross margin

A 62% gross margin indicates strong product-level economics and pricing power for Zai Lab's marketed therapies. Sustained high gross margins provide structural capacity to fund R&D and commercialization costs, cushioning profitability pressures from operating expenses over the medium term.

Conservative leverage

Low leverage and a high equity ratio give Zai Lab financial flexibility to support ongoing R&D and commercial rollout without excessive interest burden. This balance-sheet strength reduces refinancing risk and provides a stable platform to fund pipeline milestones and market expansion over several quarters.

Diversified revenue model

A mix of product sales plus collaboration and licensing income diversifies cash flow across recurring commercial sales and milestone/licensing receipts. That structure helps de-risk reliance on single products and creates multiple durable funding pathways for clinical development and commercial investments.

Negative Factors

Persistent unprofitability

A near -50% net margin indicates the company is losing significant value on current operations. Ongoing large net losses can erode equity, necessitate external financing, and constrain reinvestment into the pipeline and commercialization, posing a durable headwind to shareholder returns.

Negative operating and free cash flow

Sustained negative operating and free cash flow signals cash burn from operations and investment. Deteriorating FCF growth increases dependence on external capital or partnerships to fund trials and commercialization, creating structural funding risk and potential dilution over multiple quarters.

Poor returns on equity

A materially negative ROE indicates the company is not generating returns from shareholders' capital, reflecting inefficiencies or high costs relative to revenue. Over time, persistently negative ROE can impair investor confidence and limit access to attractive long-term funding.

Zai Lab Ltd Business Overview & Revenue Model

Company Description

Zai Lab Ltd (9688) is a biopharmaceutical company focused on discovering, developing, and commercializing innovative medicines for patients in China and around the world. The company operates primarily in the oncology, autoimmune, and infectious disease sectors and has a robust pipeline of proprietary and partnered products. Zai Lab's core offerings include its own developed therapies as well as collaborations with global pharmaceutical companies.

How the Company Makes Money

Zai Lab generates revenue through several key streams. Primarily, the company earns money from the sale of its proprietary drugs once they receive regulatory approval and are commercially launched. Additionally, Zai Lab benefits from milestone payments and royalties from partnerships with larger pharmaceutical companies, which are often structured around co-development and co-commercialization agreements. These partnerships not only provide upfront capital and financial support but also enhance Zai Lab's market reach and product development capabilities. Clinical trial funding and government grants also contribute to its revenue, along with potential licensing agreements for its drugs in other markets. The strategic collaborations with established players in the industry play a crucial role in driving its earnings and expanding its portfolio.

Zai Lab Ltd Financial Statement Overview

Summary

Zai Lab Ltd is experiencing revenue growth but faces significant profitability challenges. The balance sheet is stable with low leverage, yet the company struggles to generate positive returns on equity. Cash flow issues persist, with negative growth in free cash flow, highlighting the need for improved operational efficiency and cost management.

Income Statement

Zai Lab Ltd shows a modest revenue growth rate of 3.23% TTM, indicating some positive momentum. However, the company is struggling with profitability, as evidenced by negative net profit and EBIT margins. The gross profit margin remains healthy at 62.39%, but the persistent negative net profit margin of -49.68% TTM highlights ongoing challenges in achieving profitability.

Balance Sheet

The company's debt-to-equity ratio is relatively low at 0.24, suggesting a conservative leverage approach. However, the return on equity is negative at -27.32%, indicating inefficiencies in generating returns on shareholders' equity. The equity ratio stands at 65.55%, reflecting a solid equity base relative to total assets.

Cash Flow

Zai Lab Ltd's cash flow situation is concerning, with negative operating and free cash flows. The free cash flow to net income ratio is positive at 1.32, suggesting some alignment between cash flow and reported earnings, but the negative free cash flow growth rate of -8.91% TTM indicates deteriorating cash flow conditions.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	441.63M	398.99M	266.72M	215.04M	144.31M	48.96M
Gross Profit	270.79M	251.13M	170.90M	141.02M	92.07M	32.22M
EBITDA	-187.93M	-242.99M	-365.11M	-384.66M	-689.46M	-262.96M
Net Income	-206.81M	-257.10M	-334.62M	-481.99M	-692.44M	-298.16M
Balance Sheet
Total Assets	1.16B	1.19B	1.04B	1.22B	1.61B	1.30B
Cash, Cash Equivalents and Short-Term Investments	717.15M	779.67M	806.45M	1.01B	1.41B	1.19B
Total Debt	219.36M	153.47M	15.15M	20.39M	15.54M	18.60M
Total Liabilities	399.00M	344.86M	240.18M	174.54M	230.00M	128.29M
Stockholders Equity	759.95M	840.90M	796.12M	1.05B	1.38B	1.17B
Cash Flow
Free Cash Flow	-210.42M	-276.39M	-206.67M	-392.63M	-568.18M	-226.72M
Operating Cash Flow	-180.54M	-214.87M	-198.18M	-367.64M	-549.23M	-216.06M
Investing Cash Flow	-28.59M	-375.19M	-10.78M	420.02M	249.96M	-554.83M
Financing Cash Flow	310.60M	349.89M	-6.43M	-1.73M	820.20M	1.13B

Zai Lab Ltd Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.18
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:9688, the sentiment is Negative. The current price of 22.18 is above the 20-day moving average (MA) of 14.40, above the 50-day MA of 14.67, and below the 200-day MA of 22.86, indicating a bearish trend. The MACD of -0.24 indicates Positive momentum. The RSI at 40.82 is Neutral, neither overbought nor oversold. The STOCH value of 14.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HK:9688.

Zai Lab Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
2696	66 Neutral	HK$29.67B	35.85	27.37%	―	2.57%	18.79%
9966	53 Neutral	HK$8.82B	35.68	13.34%	―	206.58%	―
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
9995	47 Neutral	HK$57.96B	-46.04	-39.64%	―	46.14%	39.56%
9688	42 Neutral	HK$15.32B	-9.10	-30.41%	―	23.87%	30.08%
2157	40 Underperform	HK$9.33B	-43.96	-21.42%	―	240.05%	-140.09%
1877	38 Underperform	HK$41.44B	-22.29	-15.06%	―	38.56%	48.26%

Zai Lab Ltd Corporate Events

Zai Lab Limited Announces Equity Incentive Grants

Zai Lab Limited announced the grant of share options and restricted share units under its 2024 Equity Incentive Plan. The company granted options to subscribe for 11,800 ADSs to three employees and restricted share units covering 22,665 ADSs to six employees. This move aligns with the company’s customary practice and aims to incentivize employee performance without attaching performance targets or clawback mechanisms, reflecting a market-competitive approach.

The most recent analyst rating on (HK:9688) stock is a Hold with a HK$14.50 price target. To see the full list of analyst forecasts on Zai Lab Ltd stock, see the HK:9688 Stock Forecast page.

Zai Lab Ltd Announces Share Options and Restricted Share Units Grants

Zai Lab Ltd announced the grant of share options and restricted share units under its 2024 Equity Incentive Plan. The company granted options for 500 American Depositary Shares (ADSs) to one employee and 72,100 restricted share units to 78 employees. This move is part of Zai Lab’s strategy to align employee incentives with company goals, although no performance targets or clawback mechanisms are attached to these grants. The initiative is seen as market competitive and consistent with the company’s practices, potentially impacting employee retention and motivation.

The most recent analyst rating on (HK:9688) stock is a Hold with a HK$18.50 price target. To see the full list of analyst forecasts on Zai Lab Ltd stock, see the HK:9688 Stock Forecast page.

Zai Lab Reports Strong Q3 2025 Results and Pipeline Progress

Zai Lab Limited announced its unaudited financial results for Q3 2025, highlighting a 14% year-over-year revenue growth to $116.1 million and a significant reduction in operating loss. The company is advancing its global pipeline with promising developments in oncology and schizophrenia treatments, including the initiation of a global registrational study for zoci and preparations for the launch of KarXT in China. These efforts underscore Zai Lab’s commitment to expanding its market presence and delivering long-term value to shareholders.

The most recent analyst rating on (HK:9688) stock is a Hold with a HK$22.00 price target. To see the full list of analyst forecasts on Zai Lab Ltd stock, see the HK:9688 Stock Forecast page.

Zai Lab Limited Files Quarterly Report with SEC

Zai Lab Limited announced the filing of its Quarterly Report on Form 10-Q for the quarter ending September 30, 2025, with the U.S. Securities and Exchange Commission. This filing is part of the company’s regulatory compliance and provides stakeholders with updated financial and operational information, potentially impacting investor confidence and market positioning.

The most recent analyst rating on (HK:9688) stock is a Hold with a HK$22.00 price target. To see the full list of analyst forecasts on Zai Lab Ltd stock, see the HK:9688 Stock Forecast page.

Zai Lab’s Partner Amgen Halts Cancer Drug Trial Due to Efficacy Concerns

Zai Lab Limited announced that its partner Amgen has stopped the Phase 1b/3 FORTITUDE-102 trial for bemarituzumab, a treatment for first-line gastric cancer, due to inadequate efficacy. This decision may impact Zai Lab’s operations and its positioning in the oncology market, as the company will continue to collaborate with Amgen for further updates.

The most recent analyst rating on (HK:9688) stock is a Hold with a HK$22.00 price target. To see the full list of analyst forecasts on Zai Lab Ltd stock, see the HK:9688 Stock Forecast page.