CSL Limited Share Trading Update

Submitted by Craig Strzelecki on 17 April, 2007 - 17:53

CSL Limited has an upgraded share price target of $92.23 but their recommendation is lowered to Hold, Low Risk (2L) as a result of share price strength from analyst Citigroup Investment Research. Merck announced an upgrade to its earnings guidance for 1Q. Gardasil sales were $US114m for January and February in the USA alone. (IMS data). This compares to $70m (first three months) and $235m (first six months). Based on this early data, the analyst has compared the roll-out of Gardasil to a number of other billion dollar drugs to assist the analyst's growth projections. Its model has been graphed with three sensitivity analyses to growth rates, and the impact on PBT has been calculated. There has never been an anti-cancer, prophylactic vaccine before Gardasil. It is one of the three key reasons why we stated in the analyst's recently released initiation report that CSL Limited cannot be valued solely on the basis of a DCF or NPV alone. Growth projections on CSL's key products should be more sigmoid shaped sales curves rather than linear forecasts to absorb catch-up revenues in both vaccines and previously depressed plasma prices. Key risks: This vaccine is extremely expensive. Given that US doctors buy then store it for use over a 6mth period some are limiting allocation to insured patients only to manage their inventory risk, directing uninsured patients to pharmacists to buy their own vaccines. Expanding co-payments must be on the agenda in order to rein in escalating costs of childhood vaccination programs. R&D Pipeline: The Iscomatrix adjuvant is already generating royalties, milestone payments from Merck, Wyeth (US$90m) and others. This income stream cannot be ignored and the sharemarket analyst has added it as an initial proxy for valuation of the R&D pipeline.

CSL Limited is listed on the Australian Stock Exchange (ASX) under stock code CSL. You can view their investor website here. CSL was listed on the ASX on 8 June, 1994. Elizabeth Alexander is the chairman for CSL and Brian A McNamee the CEO. This company is a global, specialty biopharmaceutical company that develops, manufactures and markets products to treat and prevent serious human medical conditions. They are involved in the development, manufacturing and marketing of pharmaceutical and diagnostic products, cell culture media and human plasma fractions. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade CSL. Check your charts and good luck with your share trading!