3 reasons why the CSL (ASX:CSL) share price could be one to look at

The CSL share price might be one to think about.

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The CSL Limited (ASX: CSL) share price might be one to think about with the biotech giant expecting a recovery.

What is CSL?

According to the ASX, CSL has a market capitalisation of almost $132 billion.

It's based in Melbourne and CSL describes itself as a leading global biotech company that develops and delivers innovative biotherapies and influenza vaccines that save lives, and help people with life-threatening medical conditions live full lives. The company has more than 27,000 employees around the world, with operations in more than 35 countries.

Here are some of the reasons why the CSL share price might be one to think about:

Research and development

One of the key ways that CSL aims to stay ahead of its competitors is by investing an enormous amount of money into research and development. It has more than 1,700 employees dedicated to research and development.

Indeed, CSL looks to spend around 10% of its annual revenue on R&D each year. Due to the effects of COVID-19, it re-prioritised spending and may spend up to 11% of revenue on R&D.

Multiple large, late stage R&D programs are underway providing potential new growth opportunities.

COVID-19 recovery for CSL products

CSL has been affected by COVID-19 impacts.

One of the impacts has been that plasma collections continue to be challenging, but it has multiple initiatives to drive an improvement.

Initiatives include enhanced targeted marketing initiatives to increase collections, adoption of new technology and the plasma hold period has been reduced from 60 to 45 days. The roll-out of COVID-19 vaccines is increasing mobility.

As the COVID-19 pandemic recedes, growth in doctor visits, elective and emergency procedures are expected, leading to growth in product demand.

A recovery of plasma collections is one of the things that UBS is looking for and why it rates it as a buy with a price target of $330.

Seqirus

CSL's vaccine business has seen a surge in activity.

The COVID-19 pandemic is driving demand for influenza vaccines. In the FY21 half-year result, Seqirus revenue increased by 38% to US$1.34 billion. Growth here was particularly driven by North America (revenue was up 38%) and the EU (where revenue grew 64%).

This helped the overall CSL earnings before interest and tax (EBIT) grow 42% to US$2.36 billion, net profit grow 44% to US$1.8 billion and cashflow jump 87% to US$2.3 billion.

CSL share price

According to UBS, the CSL share price is valued at 44x FY21's estimated earnings and 46x FY22's estimated earnings.

The broker also believes that the healthcare giant is going to grow its annual dividend to $2.61 per share in FY22.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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