Value is emerging in the CSL Limited (ASX: CSL) share price even though it has largely gone nowhere in the last 12 months.
However, that might be about to change after Macquarie Group Ltd (ASX: MQG) upgraded the blood products biotech to "outperform" from "neutral".
The move has yet to make much difference to the CSL share price. It's trading just under breakeven at $314.64 during lunchtime trade.
It's pretty much the same story for the S&P/ASX 200 Index (Index:^AXJO), which just slipped into negative territory.
Outlook improving for the CSL share price
Coming back to CSL, the analysts at Macquarie believe the headwinds that have held back its shares are easing.
The first headwind comes from rivals who are pioneering new treatment options for myasthenia gravis (MG) and idiopathic thrombocytopenic purpura (ITP). For the geeks out there, the new treatment is based on neonatal Fc receptor (FcRn).
MG is a condition where patients suffer abnormal weakness of certain muscles. ITP is a blood disorder characterised by a decrease in the number of platelets in the blood.
The new treatment negates the need for immunoglobulin (Ig), which are antibodies extracted from blood. Ig is an existing CSL product.
New rival treatment not a significant threat
Based on current trial results, Macquarie believes that the new treatments could displace around 6% of CSL's Ig volumes by 2030.
"However, CSL is currently in Phase 3 trials for Hizentra in the treatment of patients with CLL (and HGG) and DM," said the broker.
"We estimate approval in these indications could provide volume upside of ~4%, providing an offset to impacts from FcRn antagonists in MG and ITP."
CLL is chronic lymphocytic leukemia and HGG is high-grade gliomas. DM is Diabetes mellitus.
Additional tailwinds for the CSL share price
The broker also believes there will be an increased diagnosis of conditions where Ig is used as a treatment. This could also be a boon for the CSL share price.
Further, the COVID-19 disruption to CSL's blood collection in the US is easing and its new plasma collection platform may present upside for the group.
How much is the CSL share price worth?
"For CSL, we also see a new plasma collection platform as potentially improving plasma collection efficiency," added Macquarie.
"This forms the basis for improved gross margin forecasts for CSL Behring from 2H23+.
"Notwithstanding elevated multiples, we see a favourable [earnings per share] EPS growth profile and strong balance sheet as attractive."
Macquarie's 12-month price target on the CSL share price is $338 a share.
