CSL share price: the Covid-19 impact examined
We look at how the coronavirus may impact Australia’s largest publicly listed company.
Not only did CSL last week reaffirm its already upgraded FY20 profit guidance – but at Tuesday’s closing price of $325 per share – the biotech behemoth sits only a shade off its 52-week high.
Indeed, when CSL first upgraded its full-year guidance in February, the company’s Chief Executive Paul Perreault proudly said: 'CSL is well positioned for sustainable growth.'
Sustainable growth, even in the face of global pandemic, apparently!
CSL share price: what analysts are saying
Of course, this is not to say that the coronavirus (Covid-19) situation doesn’t present a variety of unique challenges for the company.
CSL after all noted that the current situation presents a number of challenges to its plasma collection operations; and that the company expected modest delays across its capital projects and clinical trials.
UBS analysts, quantifying the impact of those challenges, estimate that CSL will see its plasma volumes contract by 5% over the next three to six month period. As a consequence of this, the company is also likely to see its 'IG/albumin volumes/sales' decline into the second half of FY21, argues UBS.
As a positive, the investment bank noted that, ‘plasma collection (as with whole blood donation) falls under the "essential services" banner, allowing those who want to donate an ability to do so.’
Even so, ‘With more US states implementing restrictions on people's movement, accessing collection centres may become more challenging for some donors.’
UBS currently has a Buy rating and a 12-month price target (PT) of $342.00 per share on CSL.
Yet even with those challenges in mind, the ever shareholder friendly biotech, stressed there was 'potential to accelerate activity post crisis to ensure no material change to original plan.'
The biotech even hit on one of the most talked up topics right now: liquidity. Here CSL assured investors it had plenty of it – specifically, around US$1.1 billion in available liquidity.
Like UBS, analysts from Macquarie argued that the impact of the coronavirus on CSL’s bottom-line is unlikely to be isolated to FY20. And though Macquarie downgraded its EPS forecasts for FY20 by just 1%, their analysts lowered CSL’s FY21e earnings forecasts by a more sizable 4%.
‘Given the lag between plasma collection and the manufacture of finished product, we see any COVID-19-related impacts over the next 3-6 months as primarily affecting earnings in FY21.’
Finally, and though the investment bank said that CSL boasts many favourable qualities, ‘we see the earnings risk associated with COVID-19/lower plasma volumes as skewed to the downside.’
Macquarie has a Neutral rating and a 12-month PT of $311.00 per share on CSL.
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