CSL Limited (ASX: CSL) shares are down 0.62% in lunchtime trade to $306.15 despite no news from the company.
The stock is underperforming the S&P/ASX 200 Index (ASX: XJO), which is up 0.29%.
The strongest price that CSL shares have reached in 2023 is $314.28 on 3 February. That was a new 52-high for the ASX healthcare share.
Top broker Morgan Stanley is bullish on CSL shares. It has an overweight rating on the stock with a 12-month share price target of $354. That's a potential 15.5% upside for CSL shares investors.
Let's find out why the broker is backing CSL so strongly.
Why is Morgan Stanley so positive on CSL shares?
The broker is expecting growth in CSL's Behring business, which develops and manufactures a bunch of recombinant and plasma-derived treatments for rare and serious diseases.
For this business to grow, CSL needs more plasma donations (collected through its CSL Plasma business and expansive global network of donation centres) and more production capacity so it can make more medicines for more customers.
There are a couple of tailwinds in this regard.
Firstly, plasma donations in the United States are reportedly rising. Another broker, Citi notes an increase in plasma collection centres, implying demand for immunoglobulin and albumin is growing.
As my colleague Brooke reports, a recent earnings release from CSL rival Takeda Pharmaceutical Co Ltd (NYSE: TAK) also suggests rising demand.
The US is where CSL gets most of its plasma donations. CSL Plasma operates one of the world's largest plasma collection networks, with more than 300 centres in the US alone.
Donation rates are probably rising in the US because CSL is allowed to pay people for their donations.
In tougher economies, people are more inclined to donate blood to boost their incomes. According to CSL's website, US donors can receive up to $500 per month, including $100 for their first donation.
In other positive news, CSL opened a brand new $900 million blood plasma processing plant in Australia in December, which will facilitate a nine-fold increase in Australian plasma processing capacity.
So, that's all positive for CSL Behring and implies the business will do well in 2023.
CSL share price snapshot
Over the past month, CSL shares have accelerated by 10.5% while the ASX 200 has moved up 5.1%.
CSL has not released any price-sensitive news as yet in 2023. So, its share price surge is likely due to renewed enthusiasm for ASX blue-chip shares and supportive notes from several brokers.
As my colleague Brooke reports, there are other brokers alongside Morgan Stanley also backing CSL shares.
The company will release its 1H FY23 earnings results next Tuesday.
