CSL shares rise as Citi downplays impact of Trump policies
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The news: CSL shares rallied on the ASX after Citi downplayed the negative policy impacts of the incoming US administration on Australia's largest listed healthcare company.
The numbers: Shares were up 1.1% to $276.75 by 12:50pm AEDT, having lowered nearly 9% over the last month.
Shares have declined since the result of the US election earlier this month, following concerns that the incoming US administration may implement policies that could be negative to CSL's vaccines business, which forms around 15% of the group's EBIT, and pharmaceuticals more broadly.
Citi analysts noted that during Trump's first term, the number of influenza vaccines doses distributed in the US rose 4% from 155 million in 2017 to 175 million in 2019, before spiking due to Covid.
The US Centers for Disease Control and Prevention expects around 148 million flu vaccines to be distributed this year due to post-Covid vaccination fatigue.
The context: Citi analysts said they expect CSL to be "largely spared" from potential legislation on pharmaceutical pricing given the company's gross margin is lower than the wider industry, due to costs involved in plasma collection and fractionation.
Many of CSL's products also have no substitutes or are life-saving, they noted.
What they said: "Whilst residual headline risks remains near-term, we see the pull back as a buying opportunity," Citi said.
The source: Citi research
