CSL Limited (ASX: CSL) shares have dipped 11% over the past month and are in the red again on Tuesday, trading for $275.91 apiece.
As my Fool colleague James explains, the price decline follows a disappointing market update last month.
Is this an opportunity to buy the dip on an ASX 200 healthcare giant primed for growth?
Many brokers seem to think so.
Let’s canvas their views.
Why buy CSL shares now?
Citi has a buy rating on CSL shares and a 12-month price target of $340.
Following the company’s update, Citi says:
We cut our above market FY23-25e NPATA per share (Core EPS) by -4%/-17%/-17% and cut our TP to $340 (from $350).
Our TP implies CSL should trade on an FY26 PE of ~27x, in line with the 10-year average. Maintain Buy.
The next catalyst is the release of the argenx trial data expected in July (argenx CIDP trial data expected in July).
Macquarie has an outperform rating with a $326 price target.
Macquarie says:
While we have moderated near-term gross margins for CSL Behring, outer-year forecasts remain largely unchanged with upside from pipeline contributions and improved Ig [immunoglobulin] yields.
Morgans reckons CSL shares are “poised to break out this year”.
The broker has an add rating and a $323 price target.
Morgans says:
We believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases…
As reported in The Australian today, Jefferies has also raised CSL shares to a buy with a $318 price target.
Fidelity’s Zara Lyons says healthcare shares are a defensive play in today’s inflationary economy.
She says CSL has “a diversified portfolio of assets with strong market positions and solid underlying demand”. She also likes the “attractive assets in its pipeline”, including CSL112.
Lyons says:
The company has seen a slower recovery in margins post pandemic, due to several factors including wage inflation, donor fee inflation, costs associated with capacity expansion and costs associated with the rollout of plasma donation system RIKA across its collection centres.
However, some of these costs will normalise in time, and we expect yield improvements to materialise in the longer term.
How CSL has changed since the pandemic
CSL has added to its asset base since the pandemic dragged its shares down from record highs above $340 per share in February 2020.
For example, in 2022 CSL bought Vifor Pharma AG for $16 billion. CSL Vifor specialises in the treatment of iron deficiency, dialysis, nephrology, and rare kidney disease.
In the same year, CSL also received FDA approval for its Hemgenix gene therapy to treat hemophilia B.
Among its new drugs in the pipeline is CSL112, which improves cholesterol efflux capacity.
Top-line results of a phase three clinical trial involving 17,000 patients are due at the end of FY24.
