This ASX 200 giant is about to wake up from a 3-year slumber. Are you ready?

This healthcare stock has been dormant for quite a while. But one expert reckons it's ready to break out for long-term investors.

A large-cap S&P/ASX 200 Index (ASX: XJO) stock, after not doing much for three years, is about to rocket.

That's the opinion of Fairmont Equities managing director Michael Gable, who said CSL Limited (ASX: CSL)'s one-year forward PE ratio of 28 is at the lower end of its 5-year range.

"With the current multiple looking undemanding in the context of forecast earnings per share growth of ~20% over FY22 to FY25 on a compound annual growth rate (CAGR) basis, we consider CSL to be an attractive investment at current levels."

The CSL share price is still around 16% lower than its pre-COVID high reached in February 2020.

"The large consolidation from the past 3 years could be almost ending and that should lead to the stock resuming its longer-term uptrend," Gable said on the Fairmont blog.

While the current labels remain an "attractive buy", conviction would be even higher once the stock rockets to the next milestone.

"An upside break above $300 would be the next buy signal."

A man wakes up happy with a smile on his face and arms outstretched.

Image source: Getty Images

Why is CSL an exciting long-term buy?

Gable cited some key catalysts on the horizon that could bear fruit for CSL investors.

"We consider the key catalysts for the shares to be: upside risk to gross profit margin expansion for CSL Behring over FY24 and FY25, further progress on the R&D product pipeline, and future results to validate the expected earnings growth contribution from the Vifor acquisition."

Vifor's numbers have already looked very positive, he added.

"Vifor's sales performance in 1H23 surprised on the upside, with CSL re-iterating all prior guidance, including its cost synergy target of US$75 million over three years remaining on track."

While raking in decent earnings from its mature businesses such as plasma collection, CSL is developing new products in the research lab.

"There are several potentially positive catalysts likely to emerge from the R&D product pipeline over the near term."

The four product-in-progress milestones Gable looks forward to are:

  • CSL112: currently in phase III trials, expected to launch early 2024
  • Hemgenix: US launch expected in "the near term"
  • Garadacimab for hereditary angioedema attacks: phase III data to be released soon
  • New plasma collection nomogram trial: expected to start this quarter

CSL shares are currently popular among the professional community. According to CMC Markets, 16 out of 19 analysts are rating it as a buy.

Motley Fool contributor Tony Yoo has positions in CSL. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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