CSL Limited (ASX: CSL) shares have been caught up in the broad market weakness on Wednesday.
In afternoon trade, the biotherapeutics giant's shares are down almost 1% to $304.97.
This means CSL's shares have given back the gains they made yesterday in response to a solid half year update.
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Should you buy CSL shares?
The team at Morgans has been running the rule over the result and has given it the thumbs up.
In response, the broker has retained its add rating and lifted its price target by 8% to $337.92. This implies potential upside of approximately 11% from current levels.
What did the broker say?
While Morgans believes that CSL's half year result was a touch mix, it has seen enough to remain very positive on the company. It commented:
1H results were mixed, with underlying constant currency (cc) profit a little light (+9%), but on strong, in-line revenue growth (+25%). Record plasma collections (+36%) propelled plasma products (Ig, +19%) and Behring sales (+11%), while Seqirus posted high-single digit growth despite reduced immunisation rates, and newly acquired Vifor was solid (+15%).
Underlying earnings were driven mainly by Behring (US$1,875m; 55% of op income) as plasma collections increased (+36%) and now stand >10% above preCOVID levels, driving plasma-based product sales (Immunoglobin (Ig) +19%; Albumin +11%), but some non-plasma-based products managed to perform much better (Hemophilia recombinants +22%; Specialty peri-op bleeds +8%).
Looking ahead, the broker has upgraded its earnings estimates following this update and its valuation accordingly. It concludes:
Our FY23-25 earnings increase modestly (up to c3%), mainly on lower net interest expense, higher Behring and Vifor sales, partially offset by lowered GM. We roll forward multiples, with our blended DCF, PE and EV/EBITDA based price target increasing to A$337.92 (A$312.21 previously).
