The Federal Budget has earmarked lots of cash for COVID-19 treatments. Here’s why that’s good news for the CSL Limited (ASX: CSL) share price.
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The CSL Limited (ASX: CSL) share price has done well in 2020 and the Federal Budget could have more good news in store.
While the S&P/ASX 200 Index (ASX: XJO) has slumped 10.9% this year, the CSL share price has climbed 4.4% higher.
I think the Federal Budget contained good news for vaccines and those organisations involved with the push towards coronavirus treatments. This to me says the CSL share price could be on the move in the coming months.
What the Federal Budget means for the CSL share price
There were a lot of areas covered by Treasurer Josh Frydenberg in last night’s Federal Budget. One of those surrounded potential COVID-19 vaccine candidates such as that being developed by the University of Queensland
CSL is partnering with the Aussie university as it researches a potential vaccination candidate. That’s already seen the Aussie biotech ink a deal with the government to supply 84.8 million doses of any COVID-19 vaccine.
However, Treasurer Frydenberg has earmarked billions of dollars for spending on COVID-19 vaccines, both here and abroad. $1.7 billion is already being spent in agreements for the University of Oxford and the University of Queensland vaccines.
There’s also more money going towards the CSIRO and the Medical Research Future Fund for more COVID-19 research.
I see more focus on healthcare and vaccine development as good news for the CSL share price. The more government support and goodwill towards the sector that exists, the better the operating environment for CSL.
Depending on the successful vaccine candidate(s), we could also see further deals signed with CSL depending on global and domestic demand.
The CSL share price has already outperformed in 2020 but I think it has further to run. I think COVID-19 will continue to dominate share market movements in the next 6-12 months.
That means major partners like CSL may continue to hold their gains despite volatility in the market.
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Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.