Top broker thinks CSL share price could hit $251

The CSL share price has risen modestly today off the back of a bullish broker note from investment banking giant Morgan Stanley.

As recession fears ensnare global markets and the ASX stumbles, bullishness around an infinitely expanding market seems to have grown somewhat quiet.

Yet pockets of optimism remain, with Morgan Stanley today hitting CSL – the A$107 billion biotech giant – with a lofty price target of A$251 per share and an ‘overweight’ rating.

In response, the CSL share price rose strongly, gaining as much as 3.18% by the afternoon session.

CSL share price: are there gains still to be made?

At the core of Morgan Stanley’s ratings upgrade is the belief that CSL is well-positioned to capitalise on a potentially stronger than expected demand for Immunoglobulin (IG).

Centrally, the investment bank believes that industry distribution data does not adequately reflect IG demand. CSL however, says Morgan Stanley, is well placed to fill this demand after the biotech giant reported an increase in finished goods within inventory in FY19.

With this in mind, the investment bank has upgraded its revenue estimates from CSL’s IG portfolio in FY20e, FY21e and FY22e – by 4%, 14% and 14%, respectively.

Is CSL’s valuation justified?

In short, yes.

For some time now, a persistent theme of the CSL share price has been its valuation.

Indeed, compared to historical levels and the current market, CSL does trade at a premium – commanding a price-to-earnings (PE) ratio of 37, according to the ASX.

Yet Morgan Stanley believes such an elevated valuation is justified for three core reasons.

One, there are few large-caps in Australia with a comparable growth story/ profile. Two, the investment bank cites CSL’s strong return on equity (ROE) as a standout strength of the company. And three, Morgan Stanley also believes that CSL’s low gearing is a key strength.

A growing trend

Such optimism over CSL's prospects is not wholly new mind you. Just last month, ST Wong – Chief Investment Officer of Prime Value Asset Management – was asked by the AFR whether he thought CSL shares could hit the elusive A$250 mark.

His response was short and concise: ‘I think CSL has a very good chance of breaking the $250 mark.’

On this thesis, he added that:

‘CSL’s improved market position comes at a time when product demand is strong and competitors are somewhat constrained to keep pace with supply.’

What’s coming next?

Finally, Morgan Stanley sees CSL’s AGM – set to be held October 16 – as a potential share price catalyst. Here, the investment bank is of the opinion that CSL will reiterate its previous NPAT guidance.

Year-to-date, the CSL share price has now gained around 27%, outperforming the ASX 200 index by a modest margin.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

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.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices 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.