CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

CSL share price: why concerns over 2021 earnings remain

We examine some of the concerns over the biotech’s FY21 earnings outlook.

2021 earnings weakness potential weighs on the biotech

The CSL share price remains under pressure, with the stock down ~12% in the last six months. The general expectation appears to be that while the biotech will report strong earnings in FY20, profits are set to come under pressure in FY21 as a result of the coronavirus pandemic.

Even so, in the near-term, analysts expect healthy top and bottom-line growth from the biotech, with UBS expecting a beat on the company's top end FY20 earnings guidance, forecasting full-year income of US$2,207 million – implying an impressive year-over-year growth rate of 15%. On a more granular level, CSL’s Behring division – which accounts for more than 90% of the company’s earnings – is expected to report revenues of US$7,944 million, against earnings (EBIT) of US$2,559 million.

Looking forward however, the investment bank expects CSL’s fiscal 2021 earnings growth rate to slump to 6% – representing the company’s lowest growth rate in five years – as a result of reduced collections due to Covid-19. Even so, UBS has retained its Buy rating and 12-month price target of $331 on the stock.

CSL finished Wednesday’s session at ~$270 per share.

CSL share price: Covid-19 impact

The biotech itself noted that its all-important plasma collections would be impacted by the pandemic. In response, the company highlighted a number of mitigation strategies, including: the potential to accelerate collections once the pandemic has been resolved and the anticipation that new donors will emerge as a result of challenging economic conditions.

For reference, there is a six to nine month lag between the collection of plasma and its sale, which explains both the expected strength of CSL's current year earnings as well as the concerns over FY21 earnings weakness.

Despite the headwinds facing the company, UBS argued that there are a number of positives that could offset the impact of weak plasma collections, including demand for flu vaccines and the ‘normalisation of albumin sales in China under direct distribution model.’

Alternative data at a glance

Finally, in their latest research note, UBS analysts cited the just-released Q2 results from French pharmaceutical company Sanofi as being of particular relevance to CSL’s haemophilia product portfolio. Looking at the relevant aspects of this release, Sanofi reported modest sales growth from its rare blood disorder franchise, with total sales rising 6.2% to €314 million. On a division level, Eloctate sales fell 2.9%, while Alprolix sales rose 9.5% to €117 million.

Despite short-term weakness in its share price, CSL has proven to be a long-term winner, rising over 177% in the last five years.

Want to take a position in CSL, long or short?

Create an IG trading account or log in to your existing account to get started now.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Act on share opportunities today

Go long or short on thousands of international stocks with CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.