Now could be the time to buy and hold CSL Ltd (ASX: CSL) shares.
That's the view of analysts at Bell Potter, which have become even more bullish on the global plasma fractionator.
In fact, the broker is so positive on the company that it has added its shares to its favoured list for the month of August.
What is the broker saying about CSL shares?
Bell Potter highlights that CSL has an enviable track record of generating high returns on capital over the long term. It said:
CSL is one of the world's largest global plasma fractionators. The plasma products themselves have proven excellent medical products, with wide application, and deliver therapeutic outcomes difficult to achieve by other means. The company has a proven track record of deploying capital effectively and generating high returns over the past 25 years.
And thanks to recent weakness, the broker believes that now is a good time for investors to pick up CSL shares. Particularly given that they are trading at a nice discount to their 5 and 10-year average earnings multiples. It said:
CSL presents an attractive buying opportunity as we anticipate the start of a margin recovery phase for CSL, driving above-market earnings growth over the next few years. CSL trades at a 12-month forward PE of ~28x, representing a discount to its 10-year average of ~31x and a substantial discount to its 5 year average of ~35x.
Another positive that Bell Potter highlights is that CSL's balance sheet is about to improve markedly. The broker adds:
Furthermore, the company will continue to deleverage the balance sheet over the next few years. Net Debt/EBITDA is currently 2x (FY24E) and is expected to fall below 1x by FY26. Given the company's proven quality and growth prospects, we believe significant upside remains.
Named as a buy
According to the note, the broker has put a buy rating and $327.42 price target on CSL's shares.
Based on its current share price of $301.10, this implies potential upside of approximately 9% for investors.
It is worth noting also that Macquarie remains very positive on the biotherapeutics giant. It has an outperform rating and $330.00 price target on its shares at present.
But the even better news is that it sees scope for the company's shares to keep rising in the years to come. In fact, it is tipping the CSL share price to reach the $500 mark within three years. That's 66% higher than where it trades today.
