Australia | Sep 30 2022
Brokers remain generally upbeat on CSL and focus upon the earnings contribution from the Vifor Pharma acquisition.
-CSL’s potential earnings from the Vifor Pharma acquisition
-Mexican border relief for CSL collection centres
-Potential upside from treatment of hereditary angioedema
-The latest on plasma collections
By Mark Woodruff
Shares of CSL ((CSL)) began the decade at around $280 and are now at a similar level, having traded between $340 and $240 over the journey.
Such range-bound movement is in stark contrast to the period 2017 to 2020, when shares nearly tripled in value.
Now may be a good time to review prospects for the company, given several brokers within the FNArena database have provided new insights during September.
In anticipation of an investor briefing on recently acquired Vifor Pharma, scheduled for October 17, Ord Minnett and Credit Suisse have both reviewed the expected contribution to CSL earnings.
Credit Suisse forecasts Vifor will contribute around 15% towards sales and 4% to profit for CSL in FY23, with this increasing to 8% of profit by FY25.
Vifor has leading global positions in iron deficiency and nephrology, which, according to the broker, are two non-cyclical and structurally growing niche pharmaceutical markets.
Vifor specialises in intravenous iron deficiency treatments with its Ferinject/Injectafer products and legacy drug Venofer.
However, Credit Suisse concerns itself with the nephrology business, following a recent update from Fresenius Medical Care. A higher-than-normal excess mortality in its dialysis patient base during covid has recently weighed upon the demand for renal pharmaceuticals.
Vifor has exposure to nephrology, along with Fresenius Medical Care, via the Vifor Fresenius Medical Care Renal Pharma joint venture.
The joint venture commercialises products such as Micera and Velphoro and gives Vifor access to Fresenius’ dialysis patient base.
While Neutral-rated Credit Suisse slightly lowers its CSL EPS forecasts following the nephrology update, the $305 target price remains. Investors are reminded of the potential opportunity for CSL to expand indications and increase the life cycle of Vifor products.
The broker sees a core medium-term opportunity in gaining access to the chronic kidney disease (CKD) population and expects a greater focus on cardio-renal in the long term, as patients with CKD present with elevated cardiovascular risk.
Ord Minnett also reduces its forecast earnings contribution from Vifor to reflect the drop in dialysis patients, though feels the issue will be short lived, and retains its Accumulate rating and $330 target price.
In any case, the analyst points out CSL’s Behring division provides an offset, via a boost to revenue and margin from the return of Mexican border donors.
Mexican border relief
Ord Minnett anticipates less payments will be now required by CSL to entice plasma donors. This comes as the US District court issued an injunction to prevent officials from enforcing the ban on paid plasma donations from Mexicans that enter the US with non-immigrant visas.