CSL shares: UBS outlook bullish as 2019 full-year results near

UBS has tentatively placed a 12-month price target of A$223 per share on the ASX-listed, A$99.8 billion biotechnology giant.

Even as US-China trade tensions intensify, CSL’s share price has continued to rise as we head towards the release of its 2019 full-year results, due out this Wednesday.

CSL share price: room left to run?

CSL Ltd has been a consistent performer year-to-date, seeing its share price increase 18.69%.

A strong balance sheet, an upgraded 2019 earnings outlook, and a growing line of vitally important products have all likely contributed to this share price momentum.

Even so, the Swiss investment bank UBS thinks that CSL’s share price still has room to run – even if just a little.

Here, the investment bank holds a bullish, though reserved view of CLS (ASX: CSL), slapping a buy rating and a 12-month price target of A$223 per share on the biotech giant.

Importantly, this ‘buy rating’ and 'price target' both remains under review, and may be altered by UBS depending upon market events.

Regardless of this, UBS thinks the company is well placed to meet current (revised and upgraded) earnings guidance. Specifically, UBS believes that CSL will report earnings of US$1,893 million (US$1,953 million, when accounting for currency fluctuations), when it releases its FY19 results.

Growth slows in FY20

Though UBS remains optimistic, the investment bank does believe that CSL’s growth will decelerate somewhat in the 2020 fiscal year.

According to the bank, one of the likely factors set to impact earnings relates to changes concerning the direct distribution of one of CSL’s key products in China – albumin.

Overall, UBS sees CSL reporting low double digit underlying profit growth in the 2020 fiscal year, with the bank predicting NPAT figures of US$1,989 million.

If growth slows, where to next?

Indeed, CSL Ltd has been a strong performer in the last five years, with its share price more than tripling in that period.

With such phenomenal growth however, the question that investors are likely now most concerned with may be: how much longer can this growth, both in terms of earnings and share price returns continue?

Or maybe of even more relevance, how does CSL’s current and future growth align with the company’s current valuation?

CSL will release its 2019 full-year results this Wednesday.

Click here to read our previous coverage of CSL's earnings release.


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