CSL Ltd (ASX: CSL) shares have been a mixed bag in 2024. Whilst the broader market has marched higher, CSL has pushed sideways for the bulk of the year.
Several fund managers now see CSL as an attractive option for their portfolios, given this relative underperformance.
CSL shares are currently trading at $288.81, down nearly 5% in the past month of trade. Let's see why these fundies are bullish on the biotech giant.
CSL shares still offer value
Valuation is a core function in finance, and what you pay to buy an asset matters a lot. But a comparison next to growth factors is needed to gauge price versus value.
As Warren Buffett said – price is what you pay, value is what you get.
Investors Mutual (IML) is bullish on CSL and expects significant earnings growth from the biotech giant in the coming years.
IML's Daniel Moore notes that CSL's earnings growth is comparable to that of many tech companies, except with more palatable valuations.
So despite trading at a high price-to-earnings (P/E) ratio of over 35 at the time of writing, Moore believes that CSL's steady earnings growth justifies its premium valuation, labelling it a "special business" in doing so. Speaking to The Australian Financial Review, he said:
Even when you look at some of the tech companies, their earnings growth is not much higher than CSL, but they trade on multiples considerably higher.
There's not too many businesses that can compound at that earnings growth rate. And we think it's quite a special business.
Meanwhile, those at Bennelong Australian Equity Partners also like CSL on a valuation front.
Whilst the broad market has tracked higher, CSL shares have remained fairly stagnant in terms of capital growth.
Bennelong portfolio manager Brad Clibborn believes this mismatch means the market could be undervaluing CSL. Especially when looking at earnings growth forecasts. Also speaking to The Australian Financial Review:
Where we sit today, though, we believe expectations have rebased and the company is now on track to deliver double-digit earnings growth over the medium and long term. Demand for the company's core immunoglobulin product continues to grow strongly, CSL has new products coming, and yield improvement initiatives in the IG business should drive margin recovery and add to earnings growth.
Brokers also bullish
Bennelong and Investors Mutual aren't the only firms that are bullish on CSL shares. Several top brokers rate the stock a buy as well.
Bell Potter rates CSL a buy with a price target of $316.50. It cited CSL's dominance in the plasma industry and its product pipeline and expects plenty of earnings growth in the near future.
Macquarie also issued a buy rating on CSL shares, setting a higher price target of $330 apiece.
The broker is a little more optimistic about CSL's future, particularly with its garadacimab therapy, which is expected to begin generating revenue soon.
According to CommSec, consensus also rates CSL shares a buy. As such, multiple analysts expect further upside.
Foolish takeaway
CSL shares have lagged the broader market this year. However, according to several experts, the biotech giant is now undervalued and could be well-positioned for growth.
In the last 12 months, the stock has climbed more than 14%.
