CSL Limited (CSL) is a global biotechnology company that develops and delivers innovative medicines that save lives, protect public health and help people with life-threatening medical conditions live full lives. CSL is also involved in research, development, manufacture, marketing and distribution of biopharmaceutical and allied products. CSL’s operating model for its two businesses, CSL Behring and Seqirus.
CSL reiterated FY2024 guidance for net profit after tax before amortisation of USD 2.9 to 3.0 billion, implying 13% to 17% growth on FY2023. The guidance factors in continued gross margin recovery in CSL Behring and group revenue growth of 9% to 11%, largely driven by immunoglobulins. We keep our long-term estimates broadly unchanged, but we increase our fair value estimate by 5% to $330 largely due to the time value of money and the stronger U.S. dollar relative to the Australian dollar. Shares remain undervalued as we still anticipate CSL Behring’s gross margin to recover to its pre-pandemic level of 57% by FY2027, from 49% in FY2023, consistent with management’s timeframe of three to five years. We expect margins to expand as CSL cycles through its higher cost inventory and focuses on continued improvement in its manufacturing yields. In addition, as plasma collections improve, up 31% in FY2023 to record levels, we anticipate currently elevated donor compensation costs will normalise. This is likely to drive margin expansion together with operating leverage, as labour and overhead costs scale with normalising collections and volumes.