Although the CSL Limited (ASX: CSL) share price sank lower yesterday after the release of its full-year result, its shares have bounced back nicely today.
In afternoon trade the biotherapeutics company's shares are up 2% to $127.65.
Why did its shares fall yesterday?
Despite the fact CSL posted a 24% increase in underlying net profit on a constant currency basis to US$1,337 million, investors appeared to be disappointed with its FY 2018 guidance.
According to yesterday's release, management expects net profit after tax in FY 2018 to be in the range of US$1,480 million to US$1,550 million in constant currency.
This will be an increase of between 10.7% and 15.9% on this year's profit result.
Whilst this is a slower rate than this year, it is worth noting that CSL gained from one-offs in the first-half which inflated its full-year profit growth.
Should you invest?
Based on yesterday's result, CSL's shares are changing hands at approximately 34x full-year earnings.
Whilst this isn't cheap, I believe its high quality business and strong long-term profit growth potential justifies the premium.
Especially with demand for its immunoglobulin and specialty products growing strongly. Furthermore, the company recently had its Haegarda product approved. I expect this to make a significant contribution to earnings in FY 2018.
All in all, I saw enough in yesterday's result to convince me that there's still a lot of long-term upside potential in CSL's shares.
Because of this, I would put it up there with Ramsay Health Care Limited (ASX: RHC) and Nanosonics Ltd. (ASX: NAN) as one of the best buy and hold options in the healthcare sector.
