CSL Results Drugs

ASX-listed biotech giant CSL (ASX: CSL) has exceeded its profit expectations, lifting its full-year net profit by 29 per cent to $US1.73 billion ($2.39 billion) on the back of new product launches and strong sales of products including its flu vaccines.

The company reported sales revenue for the year to June 30 rose 14.7 per cent to $US7.59 billion. The results were slightly ahead of the guidance the company provided in May.

Morningstar equities analyst Chris Kallos described the result as "better than expected", surpassing his $1.685 billion guidance by 2.6 per cent.

The result was driven by the company's vaccines firm Seqirus, Kallos says, which delivered on their target of breaking even three years after it was formed, following a severe flu season in the US.

Influenza vaccine sales grew 53 per cent at current currency - which removes the impact of foreign exchange fluctuations. Doses of the vaccine quadrupled at the company's North Carolina facility.

Kallos also praised CSL's handling of their flagship immunoglobulin products Privgen and Hizentra, used to treat patients with debilitating peripheral nerve disorder, describing both as "innovative leaders" and as "broadening the market through approvals to expand the drugs into fresh indications." Indications are treatments that have additional benefits to their original function.

CSL also delivered "exceptionally strong" launches of drugs to treat haemophilia and angioedema - a hereditary condition that can cause swelling of the face, abdomen and limbs.

Shares in CSL jumped almost 2 per cent to $205.55 in the first hour on trading. The stock is trading above Morningstar's $200 fair value estimate – subject to change following the result.

A phase three clinical trial of CSL112, a drug, which if successful, will reduce early recurrent cardiovascular events in heart attack survivors also began. Kallos increased Morningstar's fair value estimate to $200 per share after reviewing the CSL112 opportunity, saying the "blockbuster" product has the potential to take CSL's stock price to $250.

"It is a blockbuster, no doubt about it,” Kallos says. “This company is increasingly diversified and this is a very attractive product that adds to that.

“A lot of money has been spent by other companies trying to do what CSL is doing. But we think CSL has a unique mechanism that allows the transportation of the plaque very quickly.

Sales for the FLUAD flu vaccine - for people over the age of 65 - grew by 142 per cent.

Shareholders were rewarded with a 29 per cent increase in the final dividend of 93 US cents per share, compared to 72 US cents per share paid last year.

CSL expects 2018/19 net profit in constant currency terms to be in the range of $US1.88 billion to $US1.95 billion, an increase of 10 to 14 per cent from 2017/18.

Performance highlights

  • Net profit up 29 per cent to $US1.73 billion ($A2.39 billion)
  • Total revenue up 14.7 per cent to $US7.59 billion ($A10.48 billion)
  • Final divided 93 US cents per share (A$1.278), unfranked

Prem Icon Analyst note to follow.

 

More from Morningstar

Domino's shares plunge despite profit jump

Asia seeks footing after Turkish tremors

Make better investment decisions with Morningstar Premium | Free 4-week trial

Morningstar with AAP.

Emma Rapaport in a reporter with Morningstar Australia.

© [2018] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.