CSL shares extend losses with analysts mixed on HY result
Make us a preferred source
Make us a preferred source on Google
The news: CSL shares continued to slide after Tuesday's selloff, even as Morningstar hiked its valuation in the biopharmaceutical giant.
The numbers: CSL shares were down 1.2% to $254 by 1pm AEDT, having closed 5% lower on Tuesday, wiping $5 billion from its market cap.
The context: CSL reported a 6% rise in first-half NPAT and reiterated its full-year guidance, but broadly missed market estimates.
However, Morningstar increased its fair value estimate on the stock by 5% to $325 per share.
Morningstar also reduced its group earnings estimates by 2% on average from FY26, due to challenging conditions facing CSL's flu vaccine business Seqirus.
But analyst Shane Ponraj noted that Seqirus is the group's "least material division" and contributes 11% on average to Morningstar's group gross profit forecasts. The negative valuation was therefore "more than offset" by a stronger US dollar and the time value of money.
He also noted that CSL shares were undervalued as the research house was optimistic about the long-term demand for the company's immunoglobulin arm, within Behring, due to improving diagnosis rates for existing and new indications.
Elsewhere, Citi, Bell Potter, Goldman Sachs and UBS all kept 'buy' ratings on CSL. Citi and Bell Potter both cut their target prices by 2.9% from $345 to $335. UBS sliced its target price by 3.1% from $320 to $310 while Goldman Sachs' reduced by 2.2%.
What they said: Bell Potter said: "While the declining US flu market has caused headwinds for Seqirus, Behring continues its strong growth outlook and positive margin recovery, which we expect will continue to drive double digit earnings growth for the group over the mid-term".
Goldman Sachs said: "Whilst the miss to CSL Seqirus was disappointing, we note this segment is navigating challenging market conditions reflected by peers Sanofi and GSK reporting revenue declines of 6% to 15% across the corresponding half".
UBS said: "Sales cuts in vaccines mean lower profit margins as these businesses see scalable profitability. Vifor margins rise mid term, as newer products play a part, but not enough to offset our revised vaccine forecasts".
The sources: Morningstar research, Citi research, Bell Potter research, Goldman Sachs research, UBS research
