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Top broker slaps $175 price target on CSL Limited shares

In early afternoon trade the CSL Limited (ASX: CSL) share price has defied the market and pushed almost 2% higher to $158.60.

This latest gain means that the biotherapeutics company’s shares have now climbed over 25% since this time last year.

The good news for shareholders is that one leading broker doesn’t believe that this is the end of its gains and has tipped its shares to climb even higher from here.

What has the broker said?

According to a note out of UBS, following a change of analyst and valuation methodology, CSL’s shares have been upgraded to a buy rating and had their price target lifted to $175.00 from $155.00.

That price target implies potential upside of over 10% for its shares over the next 12 months.

UBS believes that CSL is capable of growing its earnings at a compound annual growth rate of 16% over the next three years.

Furthermore, its analyst believes that CSL deserves to trade a premium to its historic average due to the strong growth it is exhibiting and favourable conditions in the plasma industry.

UBS isn’t the only company talking up CSL’s prospects at the moment. A note out of Credit Suisse this morning also reveals that its analysts have retained their outperform rating and $173.00 price target on its shares.

Should you invest?

I think CSL is the best healthcare share on the Australian market and feel it is trading at an attractive price for a patient buy and hold investment. In light of this, I would have to agree with both UBS and Credit Suisse that it would be a great investment right now.

Due to its strong long-term growth potential and quality management team, I would class it as my number one pick in the sector just ahead of Cochlear Limited (ASX: COH) and ResMed Inc. (CHESS) (ASX: RMD).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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