FY 2021 results preview: Is the CSL (ASX:CSL) share price in the buy zone?

Is the CSL share price in the buy zone ahead of its results?

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All eyes will be on the CSL Limited (ASX: CSL) share price later this month when it hands in its full year results.

Ahead of the release, I thought I would look to see what the market is expecting from the biotherapeutics giant.

What is expected from CSL in FY 2021?

The bad news for the CSL share price is that analysts at Goldman Sachs have tipped the company as one that could negatively surprise this month.

Though, this isn’t necessarily to do with the FY 2021 result itself, but rather its outlook commentary.

Goldman explained: “FY21 result set to be challenging but in itself a minor focus. By reaffirming the FY21 earnings target of +3-8% despite delivering a +25% beat at 1H, CSL guidance points to an earnings decline of (47)-(58)% in 2H21. Whilst management has likely applied more than its usual degree of conservatism amidst so much uncertainty, it is also clear that the company was having to take tough decisions on customer allocations.”

What is the main thing to look for?

The reason the CSL share price has been underperforming this year is concerns over plasma collection headwinds. Goldman suspects that this could lead to cost pressures in FY 2022.

It commented: “Earlier in 2021 there had been some optimism that plasma collection volumes may approach near-normal by early-FY22. In reality, it appears that the industry is still some way short of pre-Covid levels (potentially threatening the strong recovery that had been expected during 2H22), and also that the various costs of collection/processing remain highly elevated (most notably donor fees which constitute >25% of COGS and have increased >50% in the last 18 months).”

“As such, we see scope for cautious commentary on FY22, largely predicated around cost, which may manifest in another year of cautious guidance,” it warned.

Is the CSL share price in the buy zone?

In light of the above, CSL thinks investors should keep their powder dry for the time being.

It has put a neutral rating and $305.00 price target on its shares. Based on the current CSL share price of $291.54, this implies potential upside of 4.5% over the next 12 months.

Should you invest $1,000 in CSL right now?

Before you consider CSL, you'll want to hear this.

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Motley Fool contributor James Mickleboro 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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