ASX reporting season preview: CSL

Market Index and Livewire Markets have partnered with Marcus Today's Henry Jennings to bring you a Reporting Season Guide featuring an analysis of 11 ASX 100 stocks. The guide is available here. This article focuses on biotech darling CSL. Please note the analysis was conducted before the recent market volatility.

Reporting date: Tuesday, 13 August 2024

What it does?

CSL Limited is a global biotechnology company engaged in the research, development, manufacture, marketing and distribution of biopharmaceutical products and vaccines. CSL's commercial and functional areas operate globally.

Why is it important?

CSL is important because it has consistently been voted as a favourite stock by Livewire and Market Index readers. It is also important because it is, by far, the biggest healthcare company in Australia, and one of the best healthcare companies in the world.

Consensus estimates suggest CSL will report FY24 revenue of US$14.7 billion, EBIT of US$4.31 billion, and NPAT of US$2.99 billion. Earnings per share (EPS) is expected to come in at US$6.18, whilst the annual dividend is forecast to be US$2.60 per share.

The company reaffirmed its full-year outlook in February, targeting NPATA growth of 13-17% or US$2.9-3.0 billion. CSL’s earnings have underperformed industry averages in the lasts three years, and it will be interesting to see if the company has finally shaken off the post-COVID blues that have afflicted many healthcare names.

View CSL's fundamentals, announcements and data here.

Chart as at 1 August 2024

Carl’s Technical View: Very solid short and long-term uptrends meet a potentially impenetrable barrier. This time could be the one!

The CSL chart is showing growing short and long-term uptrends, but demand is building towards a historically significant wall of supply – the zone between $312-315 (and just off screen at $320). Promising CSL rallies have been terminated in this price range for nearly five years – what’s going to make this one any different?

In terms of technicals, the build-up this time is the best of any of the previous attempts since the 20 February 2020 all-time high. I see steady and building excess demand in the form of rising trend ribbons, solid price action, and predominantly demand-side candles. The critical levels to watch are clear. A close above $314.28 should facilitate a look at $320, and beyond there, potentially a move to test the all-time high of $342.75. Alternatively, a close below $306.25 would indicate this promising rally has gone the same way as many before it did.

Henry’s take

No surprises expected. Guidance is seen as achievable with FY25 guidance to be similar in NPATA of 13-17%. Behring profit margins may continue to improve as the US economy slows a little. I would like to see some positive commentary on Vifor/Seqirus on some of the regulatory headwinds. I still have issues with the acquisition given the short patent periods. However, its core business should be doing well. It’s a quality stock but has run hard so needs to deliver.