Australia’s largest healthcare company just pulled off the nation’s biggest capital raise of all time. Now what?
The post Where are CSL (ASX:CSL) shares headed in 2022? appeared first on The Motley Fool Australia. –
It’s been a wild ride for CSL Limited (ASX: CSL) shareholders this year.
Before the market opened on Friday, the biotechnology stock had only changed 2.4% upwards in all of 2021 to trade at $291.83.
But along the way, investors had to hold on for dear life through a 52-week high of $319.78 and a low of $242.
So where will CSL shares head in 2022?
Next 3 to 6 months are critical for CSL
To finish the year, CSL raised $6.3 billion of capital to fund its acquisition of Swiss company Vifor Pharma AG (SWX: VIFN).
According to Redpoint Investment Management chief Max Cappetta, it was “the single largest primary raising in Australian history” and allowed the takeover to complete at an 8% discount to market price.
“On paper, the merits of the transaction are for an immediate uplift in EPS [earnings per share] for the group, however, there are some uncertainties related to patent litigation at Vifor,” he told The Motley Fool.
“This acquisition presents a new and valuable growth opportunity for a company which has prided itself on exemplary global growth over the past two decades.”
Currently, Cappetta’s team estimates that the CSL share price is at a “slight premium” to what they think is fair value.
“The next 3 to 6 months will be critical for the company to show that this acquisition will deliver the growth that the company needs to reaffirm its long-term share price performance,” he said.
“All eyes will be on the management discussion at their mid-year result in February.”
‘Pipeline of lucrative products under development’
Analysts at Citi are perhaps more bullish on CSL’s share price.
Last week they slapped a “buy” rating on the stock with a price target of $340, which is a 16.5% upside to the current level.
As well as the Vifor acquisition giving the business additional capability in kidney disease and iron deficiency treatments, CSL’s plasma collection operations should pick up as the US moves past COVID-19 restrictions.
“But it doesn’t stop there,” reported The Motley Fool’s James Mickleboro.
“Thanks to its ~US$1 billion spend on R&D annually, CSL has a pipeline of lucrative products under development to drive its future growth.”
Should you invest $1,000 in CSL right now?
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Motley Fool contributor Tony Yoo owns CSL Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.