Key points
- CSL's shares have fallen heavily in 2022
- Citi sees this as a buying opportunity
- The broker expects the acquisition to boost more than just CSL's near term earnings
The CSL Limited (ASX: CSL) share price is edging lower on Tuesday morning.
At the time of writing, the biotherapeutics giant's shares are down slightly to $259.86.
This means the CSL share price is now down over 12% since the start of the year.
Is the CSL share price in the buy zone?
According to a note out of Citi from last week, its analysts see a lot of value in the CSL share price at the current level.
The note reveals that its analysts have retained their buy rating and $340.00 price target on the company's shares.
Based on the current CSL share price, this implies potential upside of 31% over the next 12 months.
What is the broker saying?
Citi has been running the rule over the $16.4 billion Vifor Pharma acquisition and likes what it sees.
While the acquisition is expected to be accretive to earnings, the broker isn't as focused on that as others. Instead, Citi sees Vifor Pharma's complementary research and development (R&D) pipeline as something to get excited about.
In respect to earnings, Citi said: "Because of the large difference in the earnings multiples of both companies and the low cost of debt, we expect the transaction to be double digit NPATA accretive (although ROIC dilutive)."
As for its R&D pipeline, the broker commented: "The key positive from the transaction is that it expands the CSL late stage R&D pipeline, which we have noted for some time was limited for a company the size of CSL."
And while Citi has a few concerns over "whether this new renal division adds or detracts from the overall CSL strategy," it isn't enough to put it off recommending the CSL share price as a buy.
