Morgans increases its CSL target price to $324.40 from $301.1 after FY21 results showed better than expected top/bottom line growth and improving operating cashflow. However, the gross margin contracted on higher plasma costs. The Add rating is unchanged.
The broker points out Seqirus was the standout, on strong demand for influenza vaccines. For Behring, albumin gains on transition to a direct China distribution and cost-outs were offset by flat to down growth for Immunoglobulin/Specialty/Haemophilia.
Plasma collections have improved from April lows (not back at pre-pandemic levels) on vaccine momentum, CSL initiatives and as US covid stimulus checks are ending. Collections are considered the main determinate of margin growth and earnings trajectory into FY23 and beyond.
Sector: Pharmaceuticals, Biotechnology & Life Sciences.
Target price is $324.40.Current Price is $293.56. Difference: $30.84 – (brackets indicate current price is over target). If CSL meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).