CSL (CSL) Update

Submitted by Jim Thesiger on 29 May, 2008 - 15:07

CSL (CSL) has a target price of $42.00 from Australian Stockmarket analyst Macquarie Research Equities.

CSL (CSL)Caution on timing of Cervarix US Approval & we update for FX impact

Delays to Cervarix US approval could be protracted:

Overnight, UBS analysts acknowledged that a 2010 USA launch for GlaxoSmithKline’s cervical cancer vaccine "Cervarix" is at risk. UBSe had previously assumed a 2010 launch, a view "more bearish than consensus" which expected US FDA approval in CY09.

Gardasil monopoly till 2010 a boost to royalties payable to CSL:

UBSe forecast Cervarix to rival Gardasil securing c.30% US market share. CSL royalty from Gardasil is superior at c.6.2% vs 1.9% from Cervarix. We now switch near term Cervarix US sales estimates to Gardasil, with upside out to CY10.

Update to spot FX ‘basket’ is negative for CSL:

AUD/USD is trading at c.96 cents, a 4.7% variation to YTD avge; other key currencies in the CSL ‘basket’, EUR & CHF have experienced c.2% variation to YTD. We adjust forecasts for impact at spot rates for balance FY08 and beyond.

Valuation: PT $42 (was $42.43); Neutral Rating (was Buy)

Net impact (post Gardasil & FX changes) to UBSe is -0.8% to FY08 and -2.3% to FY09. Impact to PT is -1%; [PT is set using NAV & DCF at a 10% premium to market multiples], however, with recent strength in CSL trading this results in a Neutral rating. We continue to view CSL as a ‘core portfolio holding’ citing upside risk to Privigen IVIG sales from early plant commissioning along with flu vaccine.