Compared to its stellar rise in 2019, the CSL Limited (ASX: CSL) share price has seemingly gone nowhere fast this year. This is despite solid earnings and a contribution to the COVID-19 vaccine efforts. How have other S&P/ASX 200 Index (ASX: XJO) healthcare shares performed and why hasn't the CSL share price pushed higher?
Healthcare winners and losers
ASX 200 healthcare shares including Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), Sonic Healthcare Limited (ASX: SHL) and ResMed CDI (ASX: RMD) have all run into record highs following the tailwinds that COVID created for their earnings and businesses. These ranged from significant demand for respiratory-related devices created for Fisher & Paykel and ResMed, to supporting COVID testing around the world for Sonic Healthcare.
Conversely, there have been some healthcare companies left out in the cold during the pandemic. These include Cochlear Limited (ASX: COH) and Ramsay Health Care Limited (ASX: RHC), both of which experienced a significant decline in earnings due to lockdown measures. Cochlear's FY20 net profit after tax dipped 42% due to the deferral of cochlear implant surgeries across the world. Similarly, Ramsay's FY20 statutory net profit after tax was down 47.9% as surgeries were postponed.
CSL in the middle
CSL hasn't quite experienced the same tailwinds as Fisher & Paykel or ResMed, but its earnings haven't been severely punished like Cochlear or Ramsay.
In FY20, CSL's revenues increased 9% and net profit after tax was up 17% on a constant currency basis. The business has experienced solid earnings growth across its portfolio and expects demand to remain strong, especially for immunoglobulin and influenza products which contribute more than half of the company's revenue.
CSL has not, however, remained immune to COVID-related challenges. A number of its R&D trials were paused as it needed to prioritise patient safety during the pandemic. Furthermore, plasma donors fuel the company's pipeline and revenue. In its FY20 report, CSL revealed its plasma collections had been adversely impacted with collection volumes down 5% compared to FY19.
According to CSL, the company is implementing a number of initiatives to try to mitigate these impacts. Moving forward, CSL is targeting revenue growth in the range of 6% to 10% and net profit growth between 3% and 8%.
How has the CSL share price performed in 2020?
At the time of writing, the CSL share price has increased 9.68% in year-to-date trading. Whilst this is a significant outperformace when compared to the wider ASX 200, CSL shares still remain around 12% below the 52-week highs we saw in February this year.
