CSL: Still A Blue Chip Stock

CSL is one of the best performing stocks within the ASX20, ASX50 and ASX100 model portfolios.

Since being added in May 2015 the share price is up 113% including dividends.

The recent retracement in the share price provides another opportunity for investors to add CSL to their portfolios.



Buy Healthcare Names: CSL, RMD & SHL

Our Algo Engine has triggered buy signals in Sonic Healthcare, Resmed and CSL over the past few trading sessions.

RMD has experienced its first sell-off since rallying from $10 last year to $16 only a few weeks ago.

The ALGO engine is now flagging the new “higher low” at $14 and we suggest buying a 1/2 size allocation here and then waiting to see if we get another ALGO signal to add to the position.

CSL provides good long-term fundamentals. The PE is still expensive, however, 10 – 20% EPS growth is attractive! Accumulate at $180

SHL looks to be good value at $23. We see resistance is $25, so look to sell call options to enhance the return. 

Chart: RMD

Chart: CSL

Chart: SHL



Quality On Sale – LLC, ASX, CSL & ALL (Video Link)

Lendlease, ASX, CSL and Aristocrat are names that we covered in Monday’s Opportunities in Review webinar.

Again, we draw your attention to these high quality businesses that have seen a recent correction in their share price.

We believe these names are close to finding support and should be the focus of establishing entry conditions. Watch the short-term momentum indicators for a reversal higher.

Click below to watch the short two minute video



CSL Shares Firm On Stronger Guidance

Shares of CSL are 1% higher at $185.00 in early trade as the company announced stronger profit guidance for FY 2018.

The updated guidance has been lifted from the previous USD 1.55 to 1.6 billion range to  a USD 1.68 to 1.710 billion target.

Better than expected sales of several of their cornerstone pharmaceutical brands have supported this profit upgrade.

Despite trading near all-time highs, recent research notes have raised their medium-term price target to $190.00.

CSL is the best performing stock in our ASX Top 20 portfolio. It was first placed in the model on January 5th, 2015 at $90.00 and has gained over 105% since then.

CSL Limited



Healthcare – Preferred Holdings

CSL, SHL, RMD & RHC remain our preferred healthcare names.

Resmed is looking a little expensive and we’d like to repurchase on the next retracement.

Sonic Healthcare:  we expect 5 – 8% EPS growth and consider this a good buy/write addition to portfolios.

Ramsey Healthcare – Accumulate with $74 price target

CSL:  15 – 20% EPS growth remains attractive and adding a covered call option enhances the yield.




CSL – Outlook

CSL’s FY17 NPAT guidance implies US$1.38b net profit after tax.

The company has purchased 1.4m shares during 2HFY17, of the $500 million share buy-back program.

With the stock price now trading 28x FY18 earnings, much of the good news is priced in.  FY18 revenue $7.2b, EBIT $2.2b, forecast net profit up 20% to $1.7b, EPS US$3.60, DPS US$1.75 places the stock on a forward yield of 1.8%.

We remain attracted CSL and look for the next Algo Engine buy signal to provide a discounted entry point.

Chart – CSL





CSL and Cochlear – Valuation & Earnings Update

CSL trades 27x forward earnings.

FY18 revenue to grow 5% to US$7b, EBIT +18% to US$2.2b, EPS US$3.60 & DPS US$1.70.

This places CSL on a forward yield of 1.8% into FY18.

We own CSL and recommend a covered call into the $130 range to enhance the yield.



Cochlear was recently triggered by the Algo Engine as a buy signal and we update our 12-month share price target  to $138 based on a PE of ~27.5x. and a forward yield of 2%.

Risks remain associated with COH reimbursement changes, regulatory
intervention and adverse currency movements. However, momentum favors the stock at present.




CSL: Fully Valued At Current Levels

The share price of CSL jumped almost 14% to $115.90  this week after surprising the market with a big earnings upgrade.

After posting a first-half profit of about USD 800 million, CSL expects net profits for the year ending June 30th to grow between 18 to 20% on a constant currency basis. This forecast included a USD 20 million headwind from unfavorable currency conversions in the AUD/USD.

However, as positive as the headline and resultant share price rally appear, we suggest that this earnings news needs to be considered within a broader context.

18 months ago the F17 NPAT expectation was $ USD 1.7 billion, 6 months ago it was USD 1.5 billion and the first estimate 2 months ago was  USD 1.28 billion.

In essence, this week’s news that the profit outlook has been raised to USD 1.33 billion is considerably  lower than the earnings figures that  CSL was expecting just 6 months ago…….yet the share price has moved from $90.00 to $114.00.

Based on industry assessments about potential pockets of competition within the immunoglobulins area, the forward earnings trajectory could be revised again over the next few months.

As such, we consider CSL in the $114.00 to 120.00 price range to be full-valued.

Our Algo Engine triggered a buy signal at or near the recent lows of $92.

Chart – CSL