The CSL Ltd (ASX: CSL) share price has continued to trade sideways despite the S&P/ASX 200 Index (ASX: XJO) running around 6% higher year to date.
The ASX 200 is now within 2% of its pre-COVID high, but the CSL share price needs to add another 25% to be in a similar position. After what seemed like strong half-year results back in February, what's next for the CSL share price?
CSL share price impacted by plasma collections
Plasma is an essential raw material for CSL Behring's immunoglobulins, which generated US$4,256 million of the group's US$5,739 million revenue in the first half of FY21.
The pandemic has adversely affected plasma collections, with December 2020 collection volumes representing ~80% of December 2019 volumes. Plasma collections are arguably a factor that could sink or swim the CSL share price in the near term.
The looming shortage has even seen the company turn to the public for ideas on how to get the community to step up plasma donations. CSL is offering $40,000 and mentorship as a reward for the winning idea.
What does the broker say?
A note from Macquarie on 26 March observed that foot traffic across approximately 100 of CSL's US-based plasma collection centres had fallen below levels recorded in July-December 2020.
In this note, the broker acknowledged that seasonality tended to play a role in the weakness experienced across late February and early March. Often associated with the timing of annual tax returns.
Moving through this period, the broker expected collections to improve from mid-March through to June. With these assumptions in mind, it retained a neutral rating for the CSL share price with a $288 target price.
On Monday, Macquarie provided an update highlighting that collection centre foot traffic had yet to show a sustained improvement. The broker observes that foot traffic within the centres had eased in April after declines from mid-March.
Without the anticipated improvement in plasma collections, Macquarie now expects lower immunoglobulin related revenue growth in FY22.
The broker retained its neutral rating and lowered its target price from $288 to $282.50. This represents an upside of 5%, but the pressure is on CSL to lift its plasma collections.
