Is the CSL Limited (ASX:CSL) share price good value right now? Here’s why it might be…
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It is now made up of two businesses – CSL Behring and Seqirus.
CSL Behring is the biotherapeutics side of the business focused on developing life-saving products from human blood plasma. Among its leading products you’ll find the likes of Haegarda, Hizentra, and Privigen.
Whereas Seqirus is the company’s vaccine business, which has really come to prominence this year because of the COVID-19 pandemic. It recently announced plans to invest ~$800 million in the construction of an influenza vaccine manufacturing facility in Melbourne.
This follows the announcement of a major deal with the Federal Government for the supply of a range of life-saving treatments for over 10 years. This includes anti-venoms for Australian snakes, spiders and marine creatures, and influenza pandemic protection.
Research and development.
One of the keys to the company’s success over the years has been its investment in research and development (R&D).
Every year CSL invests in the region of 10% to 12% of its sales revenue back into its R&D activities. This means almost US$1 billion was invested in these activities in FY 2020.
This has helped ensure that CSL is at the forefront of innovation in the industry and has led to it developing a wide portfolio of therapies and vaccines generating billions of dollars of sales each year.
Pleasingly, the company’s investments in recent years means that it has a burgeoning R&D pipeline, positioning it perfectly for growth.
Is the CSL share price in the buy zone?
It is partly because of this pipeline that one leading broker is recommending CSL as a buy right now.
Following its R&D briefing last month, UBS put a buy rating and $346.00 price target on its shares.
It notes that product development has been a key driver of growth over the last few years and appears confident that this will be the case in the future. Particularly given its opportunities in antibodies, gene therapies, and COVID-19.
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James Mickleboro 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.