Is the CSL share price still a ‘buy’?

Buy, hold or sell?

That’s always the question analysts start asking when a stock is ‘running hot’.

And at this point – CSL – which now boasts a market capitalisation of $117 billion – is indeed running hot, with its share price up 40% year-to-date.

It’s valuation has moved in-step, with the Australian-based biotech giant currently priced at $261 per share and trading at a frothy earnings multiple of 43.1x.

Its forward FY20 earnings multiple comes in a little lower at 39.3x, according to UBS, at least.

UBS: a competitive profile

Besides valuation metrics, UBS recently assessed the financial performance and related commentary from some of CSL’s core competitors with the aim of gleaming insight into the company’s key markets.

Maybe the most important takeaway UBS formed from this research: demand for Immunoglobulin (IG) and albumin remains strong, with CSL exhibiting above peer-group growth in the IG space. This last point may indeed give some credence to CSL’s above-market earnings multiple.

On the other-hand, the Hereditary Angioedema (HAE) market looks to be a more competitive space, notes UBS, with the company Takhzyro, emerging as a major competitive force.

With all this in mind, and factoring in CSL’s broad plasma portfolio, lowest cost of goods sold (COGS) on a per litre basis – among other factors – UBS has maintained their optimistic view on CSL, positing that the biotech heavy-weight is well positioned to see stable and ‘robust’ earnings growth over the mid-term.

Specifically: UBS sees CSL’s earnings (EBIT) as steadily rising over the coming four fiscal years: from an estimated US$2,687 million in FY20 to an estimated US$3,999 million in FY24.

Even with these positive points outlined, UBS has a neutral rating and a 12-month price target of A$265 on CSL – a shade ahead of the company’s current share price.

CSL share price: what are the other analysts saying?

Mind you, though UBS has a ‘neutral’ rating on CSL, this is not indicative of the broader analyst consensus.

In fact, according to Bloomberg Data, 64.3% of analysts currently have a ‘buy’ rating on CSL; 28.6% have a ‘hold’ recommendation; and only 7.1% have a ‘sell’ recommendation.

Yet even with this bullish recommendation consensus, the average share price target for CSL is currently $245, a touch below the last-traded price, according to Bloomberg Data.

Dr David Stanton, from Jefferies for example, has the highest price target on CSL of any analyst, currently at $293.25 per share. In contrast, Wilsons has a target price of just $211.72 on CSL.

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