CSL dips on the largest capital raise in Australian history

Healthcare heavyweight CSL (ASX: CSL) tumbled 8% at open as the stock resumed trading following a successful $6.3bn institutional placement. 

CSL said the placement received strong support from existing shareholders and new investors. The placement was determined via a bookbuild process, whereby applicants bid for shares at the price and quantity they want. 

The final price was set at $273 a share, representing an 8.2% discount to CSL’s closing price of $297.27 on Monday. 

The cash injection moves the company one step closer to entering the US$25bn kidney disease treatment market via the $16.4bn acquisition of Swiss-based Vifor Pharma.

CSL will now launch a share purchase plan for eligible shareholders on Tuesday, 21 December. The share purchase plan will seek to raise up to $750m. 

Investors buy the dip 

CSL is currently trading at almost exactly its placement price of $273. 

More than 2.8m shares traded hands at noon, compared to its 20-day average of just 753,000 shares. 

The $6.3bn placement offered discounted stock to institutional investors, but has to some extent, left its own investors in the dark. 

But now, any investor can buy CSL shares at-market at the same price offered to institutions. This might reflect why the stock is trading at such abnormal volumes on Thursday. 

Earnings kick 

Vifor Pharma is expected to be low-to-mid teens accretive for the Group’s net profit after tax and amortisation. To add some perspective, CSL delivered $2,375m in net profit in FY21. 

Whereas looking ahead, CSL expected FY22 profits to go backwards between -5.3% and -9.4% against the previous period. 

What brokers think 

Among household brokers, Morgans raised its CSL target price to $334.70 with an Add rating, Macquarie retained a $338 target with an Outperform rating and Citi upgraded its target to $340 with a Buy rating, according to FN Arena. 

Morgan Stanley and Ord Minnett were far less optimistic, retaining a hold or hold equivalent rating with $280.00 and $315.00 target prices.

The consensus target price of $320.45 suggests an upside of 17.4% to today's prices.