Top broker argues the CSL share price could soon hit $300

We examine why Macquarie Wealth Management thinks the CSL share price could rise another 8% over the next 12-months.

At the risk of getting left behind – Macquarie Wealth Management has today bumped up their 12-month price target on CSL – the ASX-listed, $128bn biotech behemoth – to $300 per share. The CSL share price rose modestly in response: up around half a percentage point by the late afternoon.

UBS was early to this game: first slapping CSL with a price target of $265 not-too-long ago before more recently ramping that price target up to $295 per share.

The market has followed in step – or lagged behind such predictions – depending on your perspective. Regardless, the CSL share price is now up 52% YTD.

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CSL share price: why Macquarie is bullish

Like UBS, Macquarie believes that strong immunoglobulin (IG) price growth is likely to help CSL’s earnings in the years ahead.

Not only that, but recent trends in the haemophilia market have also led Macquarie to see 'near-medium' term upside for CSL's haemophilia revenue growth. This, says the investment bank, will be spurred on primarily by CSL’s Idelivion product.

Finally, Macquarie also contends that CSL’s expansive network of plasma collection centres represent a key competitive advantage for the company when compared to its slower moving peers.

Quantifying these estimations – on the top and bottom-line – Macquarie has significant expectations for CSL in the coming years. For example, the investment bank believes that CSL can grow its revenue from $8,208m in FY19; all the way up to $10,598m in FY22.

On the bottom-line and based on IG price growth assumptions, Macquarie has bumped up its earnings per share (EPS) estimates for CSL by 1%, 3% and 4% between FY20 to FY22. The investment bank also believes the company's earnings (EBIT) can grow from $2,504m in FY19 to $3,503m in FY22.

As a consequence of all this, the investment bank has also lifted its share price target from an already significant $250 per share to $300.00 per share, while maintaining their overweight rating.

Favourable currency factors have also contributed to this bullish outlook.

The next catalyst?

Macquarie posits that the next two possible catalysts for the company's share price will come from the next wave of monthly Plasma Protein Therapeutics Association (PPTA) data and CSL's research and development day – set to be held on the 4th of December.

In saying that, one gets the feeling that further bullish broker reports will be the main 'catalyst' investors are waiting out for.


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