CSL Update

CSL has a neutral stock recommendation and a share price target of $36.52 from Australian stockmarket analyst Macquarie Research Equities.

CSL: Trading Idea

Baxter International Incorporated (BAX.US), supplier of medical products, reported their quarterly results which were a positive result from CSL’s perspective. Macquarie Research (MRE) maintains their neutral recommendation for CSL stock with a 12 month price target of $36.52. CSL stock traded up 0.8% this morning to $38.12.

CSL – Neutral
Current Price: $38.02
Target Price: $36.52
P/E: 30 X
Dividend Yield: 1.1% (26.7% franking)

CSL’s mix-shift to liquid IVIG Privigen (which is being researched for its potential as an effective treatment for Alzheimer’s Disease) is only just beginning and it has this driver of growth to potentially look forward to in coming periods (assuming US dollar weakness).

CSL Impact of the BAX Results:

• BAX’s 1Q08 were a positive result for CSL – as a result of further strength in demand and improved pricing for BAX’s plasma business.
• Even though IG percentage point growth has declined from 30% to 25% in constant currency (29% actual), the Q407 figure of 30% was a peak with Q207 at 19% and Q307 at 23%. The decline can be partially explained by the roll-off of the mix shift from the conversion to Baxter's higher margin liquid IVIG which began in 2006.
• The bulk of Baxter’s IG growth is hence now more reliant on liquid price and demand growth which in any case is continuing to increase, principally via higher demand from increasing indications and users of the product.
• Plasma protein (albumin and plasma-derived coagulation factors) growth has been stronger this quarter at 10% vs 8% in the Q407. Again driven by pricing strength from increased demand.
• Recombinant growth was steady at 8% constant currency growth, with conversion to higher margin Advate is also beginning to roll-off internationally but underlying demand strength continuing.
• Also, the results of the Phase II: IVIG in Alzheimer’s trial were formally released this morning – although they have been available on embargo for some weeks. No change from previous reported results (i.e. the results are positive suggesting some efficacy of IVIG in Alzheimer’s) but much larger trials required, and are priced in to CSL's share price.

Trading Instalment - CSLIMG $26.67 November 2008 (Delta 81)