The CSL Ltd (ASX: CSL) share price has been on a rollercoaster over the past year, trading as high as $221.76 and as low as $90.
The price has recovered well from those lows, and the shares are now changing hands for $193.89.
The question now is, how much are they worth into the future?
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Broker says CSL shares are a good buy
Morgan Stanley has made a call on that value, which I'll reveal shortly.
First let's have a look at what's driving their valuation.
The broker has called out two recent developments – agreements struck with Varm-X and Alentis for the development and commercialisation of VMX-C001 and lixudebart.
The most recent agreement, with Alentis, aims to develop lixudebart into a potential first-in-class treatment for people with rare kidney and liver disease.
CSL said in early October that the compound was currently being evaluated in a Phase 2 trial, "in patients with ANCA-associated vasculitis and rapidly progressive glomerulonephritis (AAV-RPGN), a rare and potentially life threatening auto-immune disease that can cause irreversible kidney damage and end-stage renal disease''.
CSL Executive Vice President Dr Bill Mezzanotte said the agreement, "reflects CSL's commitment to building a leading global nephrology franchise, and our strategic intent to create high-value external partnerships''.
Morgan Stanley said it was factoring in an FY32 launch for lixudebart.
The other agreement is focussed on developing a treatment to restore blood coagulation in patients taking a Factor Xa inhibitor.
Morgan Stanley said they had factored both compounds into their financial assumptions going forward.
They said:
For VMX-C001, we include ~US$765mn of revenue by FY36, with a valuation contribution of ~A$8/ share. For lixudebart, we capture ~US$500mn of revenue by FY36, with a valuation contribution of ~A$3/share. Together, this provides EPS upgrades of ~2% in FY32 rising to ~7% in FY36.
CSL back on track
Morgan Stanley said, looking across FY26 and FY27, there had been improvement at the company.
They added:
More generally, we see the FY26 result and FY27 guidance as highlighting incremental improvement within CSL Behring, the key driver of group earnings growth over the medium to longer term (see here). Our forecasts imply solid underlying NPAT growth, supplemented by an ongoing buyback program (EPS growth of ~8% p.a. over FY28-30). CSL trades on 20.6x our 12-month forward underlying EPS forecast, with further multiple expansion contingent on commercial delivery and R&D pipeline expansion.
Morgan Stanley has a price target of $200 on CSL shares, up from $182, compared to $193.89 currently.
The company is currently valued at $92.2 billion.
