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What to expect when CSL releases its half year results this week

This week sees a number of blockbuster half year result releases on the Australian share market.

One of the most highly anticipated results will come from global biotech giant CSL Limited (ASX: CSL) on Wednesday.

The CSL share price is up 36% since this time last year and expectations certainly are high for FY 2019.

What should you expect in the first half?

According to a note out of Credit Suisse, it expects CSL to deliver first half revenue of US$4,509 million, earnings before interest and tax of US$1,627 million, underlying net profit after tax of US$1,218 million, and an interim dividend of 90 U.S. cents per share.

On the top line this represents growth of 9% on the prior corresponding period and on the bottom line it will mean 12% growth. Credit Suisse has a neutral rating on its shares.

One broker that is a little more positive is Goldman Sachs. It believes CSL is well-positioned to surprise to the upside when its reports its earnings on Wednesday.

It pointed to robust market conditions for immunoglobulins as a reason to be positive. Although there was a dip in October, immunoglobulin volumes are still tracking 6% to 7% year on year according to its analysts.

Goldman expects this growth to be complemented with low-mid single digit pricing tailwinds in the U.S. and Europe, which are likely to support top line growth and its margins.

In addition to this, the broker notes that recent “commentary suggests Haegarda continues to take share in the attractive HAE market despite 1H19 being the first period that it has faced competition from Takhzyro.”

Another thing to look out for in its first half results will be the performance of the Seqirus vaccine business after a relatively benign flu season. Management has previously advised that its FY 2020 target for the business is $1 billion in revenue and a 20% EBIT margin. It may provide an update on how it is tracking to this target.

One final thing to look for is its guidance for the full year. Management has previously stated that its FY 2019 guidance range for net profit after tax in constant currency is US$1,880 million to US$1,950 million. Some believe management has been conservative and could increase its guidance this week.

Should you invest?

Whilst I think that CSL is one of the highest quality companies on the Australian share market and a great buy and hold option alongside ResMed Inc. (ASX: RMD) and Cochlear Limited (ASX: COH), with its results release now just one trading day away from being released, it may be prudent to wait for them before picking up shares. Alternatively, you could consider buying half now and then half after the release.

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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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