‘Large and very profitable’: Analysts like this biotech stock and give it major upside
The biotechnology sector has finally picked up steam after a tough 2022 — and one under-the-radar stock stands out to fund manager Hugh Dive. That’s CSL Limited , an Australian company that researches, develops and manufactures drugs and medical products. Drugs in its portfolio include Aflunov, a vaccine for H5N1 influenza, and Exforge, which is used to control hypertension. Dive, who is the chief investment officer at the Australia-headquartered Atlas Funds Management, describes the company as “high quality” and “very well run, large and very profitable.” He oversees around 100 million Australian dollars ($66 million) in assets across various funds offered by Atlas Funds Management. “CSL is a great company – it has done very well out of acquisitions over the years, and it is also very efficient at creating immunotherapy blood [treatments],” he told CNBC Pro on Dec. 5. The company’s most recent major acquisition was Swiss drug manufacturer Virfor Pharma, for $11.7 billion, announced in December 2021 . According to Precedence Research, CSL stands to gain from an industry boom with the biotech sector poised to grow at a 12.8% compound annual growth rate from 2023 to 2030, according to a July report . Shares in CSL have had a bumpy ride in the past few months, falling nearly 14% between the start of September and the end of October — only to jump by 11% last month. Year-to-date, shares were down nearly 5% to 269.50 Australian dollars on Dec. 12. CSL-AU YTD mountain Year-to-date shares in CSL Limited The biotech stock is the third-largest on the Australian stock exchange and accounts for around 6% of the benchmark ASX 200 Index. Like Dive, analysts at Citi are also bullish on the stock despite the price fluctuations. They give it a buy rating and price target of 325 Australian dollars, giving it nearly 30% potential upside. Opportunities for the biotech player include a recovery in the gross margins at CSL Behring — its biotherapeutics division — over the next 3 to 5 years, as margins from plasma-derived therapies improve, the Citi analysts wrote in a Dec. 5 flash note. Jefferies also likes the stock. “CSL continues to expect double digit earnings growth over the medium-term,” thanks to growth across its segments, the investment bank’s analysts wrote in a Nov. 14 equity research note. The analysts have a buy call on CSL at a target price of 315 Australian dollars. Of the 17 analysts covering the stock, 14 give it a buy or overweight rating with an average price target of 306 Australian dollars, according to FactSet data. — CNBC’s Michael Bloom contributed to this report.
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