There are a number of reasons to consider looking at CSL Limited (ASX: CSL) at the current share price.
What is CSL?
It’s the biggest healthcare business on the ASX with a market capitalisation of $126 billion. CSL says that it’s a leading global biotech company. It develops and deliver innovative biotherapies and influenza vaccines that save lives, and help people with life-threatening medical conditions live full lives. It’s one of the largest plasma collection businesses that operates in the US.
3 reasons why the CSL share price could be attractive
Expected recovery
CSL has been hurt by what has been going on with COVID-19. Over the last year or so, plasma collections have been adversely impacted. The FY20 plasma collection volume was down, with additional collection costs incurred.
It was important for those plasma collection centres and the manufacturing sites to remain open during the pandemic to maintain supply of lifesaving medicines and influenza vaccines. CSL developed strict protocols to ensure the safety of employees and donors.
CSL has taken a number of actions to help a recovery. There have been adjustments to US donor compensation, it implemented a call-back program for first-time, lapsed and temporarily deferred donors, CSL implemented pre-assessment of potential donors, it implemented social distancing, the company made sure there was enhanced cleaning and disinfectant procedures and so on.
The company continues to open new centres, with 25 new ones in the US during FY21. It plans to open another 40 in FY22.
Research & development spending
CSL is a leader in the biotechnology space. Meaning, biology technology. CSL has invested heavily in the past to be the current business it is today. The healthcare giant continues to invest around 10% of its revenue each year to create new products and therapies.
It’s this R&D that will unlock more earnings streams in future years and gives it the best shot of continuing to grow profit at a solid rate over the longer-term.
Humanity will continue to face biological issues in the future and CSL is important in that area. Governments and patients will be willing to spend on the best healthcare outcomes.
High quality business
CSL is one of the highest quality blue chips around. It has long-term focused management. The company has an attractive policy of paying (growing) dividends to shareholders.
I think that the future looks very promising with multiple large, late stage R&D programs underway. This provides potential new growth opportunities for CSL.
The healthcare giant is well placed to grow profit when the COVID-19 crisis ends.
