It seems even a pandemic can’t put a dampener on CSL Ltd’s [ASX:CSL] performance.
The biotech superstar has defied all the odds today. Reporting a US$2.1 billion profit for the 2020 financial year. Up 17% from the year prior.
A standout result for a standout company. One that has seen the CSL share price climb 7.34% higher at time of writing. Pushing the stock to levels not seen since late April…
So, is the worst over for this ASX juggernaut?
Yet another year of impressive growth
Once again, leading the charge for CSL was their key immunoglobulin portfolio. With sales for the year up 22%; clocking in at US$4.01 billion.
That figure represents just under half (44%) of CSL’s total US$9.15 billion worth of revenue. An incredible reminder of just how dominant the company is in the sector.
However, that’s not to say they’re lacking when it comes to sales diversity either.
A 21% increase in seasonal flu vaccine sales proves that CSL isn’t a one-trick pony. Proving that the Seqirus arm of the business — which was formed just five years ago — is already a smash hit. Meeting and exceeding all expectations to date.
All of which has helped CSL continue to grow and expand. Making it not only one the largest healthcare companies in Australia, but the world.
Things are certainly looking going well for this iconic business.
But that doesn’t mean there aren’t potential challenges ahead of them…
As CSL’s CEO, Paul Perreault, comments:
‘The COVID-19 pandemic does, however, present a challenge for the global plasma industry. The collection of plasma has been adversely impacted in the past few months as communities respond to shelter-in-place orders, extended lockdowns and other government actions.
‘To mitigate this, we have a number of initiatives in place to sustain plasma collections. It is our view that, at some point, the pandemic will recede and, with that in mind, we continue to invest in plasma collection and manufacturing facilities as well as our hallmark research and development programs.’
In other words, if this pandemic isn’t dealt with soon then CSL could face some headwinds. Because without plasma, their key immunoglobulin market will be adversely affected.
And that is a serious risk that even CSL must be wary of.
Overpriced blue chip, or opportune growth story?
At the end of the day, deciphering CSL’s prospects is tricky.
While they certainly have a strong track record and impressive profitability, they aren’t exactly cheap. With a P/E ratio of 46.2, investors are paying a hefty price for this stock.
Which, if the growth continues, may in hindsight look like a bargain.
But, if the worst comes to bear, well then CSL could have a very dramatic fall from grace.
It is up to shareholders to decide if they’re priced at fair value or not. Considering the fact that the biggest risk right now (the pandemic) is still looking like it’s far from over.
Suffice to say, I personally wouldn’t be putting any money into this stock right now. Not when there are far more promising growth stocks out there.
Take our latest report on ‘high-value small-caps’, for example. Showcasing four stocks that have exponential potential and far more room for upside.
For Money Morning