One of the quintessential blue-chip shares of the ASX, CSL Limited (ASX: CSL) has had a rough time of it during the pandemic.
Lockdowns all over the world were a big problem for the biotherapies company, as it couldn't derive its usual volume of plasma collections — particularly in the United States — to make as much product as usual.
CSL is the largest collector of human blood plasma in the world. It relies on hundreds of thousands of donors to produce its critical medicines, including vaccines against the flu and polio.
Just before the pandemic hit the ASX in March 2020, the CSL share price was as high as $336.40. That was in mid-February 2020. Then it came crashing down, along with pretty much every other ASX share, to an initial low of $270.88. Then came the struggle through the first two years of COVID-19, during which time CSL shares have been effectively rangebound between the mid-$200s and about $315.
Today, the CSL share price is $270.66, up 1.38% in today's session so far. Year-to-date, it's down 8.5%.
So, when is the time right to pounce on CSL shares?
Well, one broker — Citi — reckons it's a buy right now. They have a $335 price target for the next 12 months.
As my Fool colleague James reported last week, "Citi highlights that the company's shares are underperforming the market this year but appears optimistic this will change as plasma collections begin to recover and the acquisition of Vifor Pharma closes."
Morgan Stanley looks further ahead
Analysts at Morgan Stanley reckon the CSL share price is heading in the direction of $400 by 2025.
According to reporting in The Australian, the broker says this will be driven by three factors. And all of them relate to CSL's US$12.3 billion (A$17.2 billion) acquisition of Swiss biotech giant Vifor Pharma.
Morgan Stanley analysts estimate the deal is 8% earnings per share-accretive to CSL in FY23 "if the acquisition indeed proceeds". (According to a CSL statement yesterday, everything is on track for the deal to be completed by June).
The note reportedly said, "Given CSL's long track record of fundamentally outperforming peers, we believe the Vifor outlook could be very different in CSL management's hands."
The analysts expect "material EPS upside" due to three key factors.
- Higher revenues through CSL sales channels for Vifor drugs Veltassa, Korsuva/Kapruvia, and later Vadadusta
- A revenue boost from Vifor's Injectafer through greater adoption of Patient Blood Management
- Developmental transplant franchise benefits from Vifor's Fresenius Medical Care and Fresenius Kabi relationships
The note said CSL's plasma collections have returned to pre-pandemic levels and its vaccine products are performing strongly.
What else is affecting the CSL share price?
Yesterday, CSL revealed it has priced US$4 billion of bonds in the US market, which will help pay for Vifor.
CSL's Chief Financial Officer, Joy Linton said:
The strong support shown by investors towards our inaugural US dollar bond issue reflects positively on our track record of disciplined financial management, as well as confidence in our strategy to invest in our leading therapeutic capabilities and generate sustainable growth.
