The CSL Limited (ASX: CSL) share price is out of form on Wednesday.
At the time of writing, the biotherapeutics giant’s shares are down 2.5% to $293.10.
Why is the CSL share price under pressure on Wednesday?
Today’s weakness in the CSL share price appears to be due to a broker note out of Citi this morning.
According to the note, the broker has downgraded the company’s shares to a neutral rating but retained its $310.00 price target on them.
Based on the current CSL share price, this price target implies potential upside of 5.8% for its shares over the next 12 months. This potential return simply was not enough for the broker to maintain its buy rating.
What did Citi say?
The note reveals that Citi made the move on valuation grounds, believing that the plasma collection market recovery is now fully priced in.
It commented: “We move CSL to Neutral (from Buy) given the outperformance of the stock since March. We remain 15% ahead of consensus for FY23E, and believe that the plasma collection market will normalize this year. Our rating change is purely valuation based.”
It is worth noting that Citi does see some upside risk for the CSL share price. This is from the CSL112 phase III trial result. The broker explained: “Risk to the upside remains if the CSL112 phase III trial result due at the end of CY21 is positive.”
This clinical trial is evaluating the efficacy and safety of CSL112 for the reduction of early recurrent cardiovascular events following an acute myocardial infarction (MI).
What is CSL112?
CSL112 is a novel apolipoprotein A-I infusion therapy that has been shown to have an immediate and significant impact on the ability to remove cholesterol from arteries. The trial aims to enrol more than 17,000 patients from approximately 1,000 medical centres across the world.
CSL notes that cardiovascular disease is the leading cause of death globally, with an estimated 800,000 acute MIs occurring each year in the United States alone. Furthermore, patients who survive an acute MI are at high risk of experiencing early recurrent cardiovascular events. The majority of which occur in the weeks and months following the initial event.
As a result, CSL112 could be a very important and lucrative therapy if all goes to plan.