Australian ASX200 earnings preview CSL

CSL Limited (CSL) is Australia’s largest drugmaker, one of the world’s largest biotech companies, a leader in flu treatments and plasma protein therapies, and a leading provider of in-licensed vaccines. It reports its full-year numbers on Wednesday the 18th of August at 10 am.

Australia

COVID-19 continues to present challenges for CSL’s supply chains and the collection of plasma, an essential raw material used in the production of many of CSL’s therapies, which account for almost half of CSL’s sales.


CSL products are critical to sustaining patients’ lives, and because of this, its plasma collection centers and manufacturing facilities are classified as ‘essential services’ remaining operational during the pandemic.

The Covid-19 vaccine that CSL was working on with the University of Queensland was scrapped in December after it delivered misleading results. Following the cessation of the trials, CSL focused its attention on producing and accelerating the manufacture of the Oxford University/AstraZeneca COVID-19 vaccine. The first doses were dispatched at the end of March 2021. 

CSL is renowned as a quality company. However, it is trading only about 3% higher than it started in 2021, while the broader market is up over 15% year to date, partly explained by the increased costs associated with the collection of plasma. 

Some headwinds have begun to ease. A significant portion of CSL’s revenues is earned offshore in US dollars. A lower AUDUSD exchange rate is helpful to CSL’s earnings.

Additionally, CSL is believed to be a front runner to produce vaccines based on the mRNA science underpinning vaccines produced by Moderna and Pfizer instead of the AstraZeneca adenovirus-based vaccine. 

At its half-year earnings report, CSL said it expects FY NPAT to grow at between US$2.17 billion to $2.265 billion, implying growth of between 3% and 8%. Not overly exciting for a company trading on a price/earnings ratio of more than 44X FY 21s earnings.

Technically, the decline from the $342.75 high of February 2020 appears to be a countertrend after a stunning multi-year rally. Once the correction is complete, the uptrend is expected to resume. 

As such, we would consider buying CSL shares on a dip into support near $280, coming from the trendline from the March $267.53 low . Or on a sustained break above trend channel resistance $300/310ish, an indication the uptrend has resumed. 


CSL Daily Chart


Source Tradingview. The figures stated areas of the 17th of August 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as having any financial product advice or financial product recommendation

More from ASX

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.