BUZZ-Morningstar sees Australia's CSL as 'cheap', optimistic for margin rebound
Morningstar views Australia's CSL as undervalued despite a 40% drop in shares since acquiring Vifor in August 2022. The acquisition has diluted ROIC, but Morningstar expects improvement to pre-acquisition levels. CSL's current plasma product pipeline is slim, but margins are expected to rebound due to restructuring and new high-margin products. The fair value estimate remains at A$295.
Morningstar says while CSL (CSL.AX) shares have lost around 40% since acquiring iron deficiency and kidney disease business Vifor in August 2022, several other factors have also contributed to the stock’s lacklustre performance
Adds while the Vifor acquisition has diluted return on invested capital (ROIC), Morningstar expects the segment to turn around and sees group ROIC to improve to CSL’s pre-acquisition levels
Morningstar flags CSL’s current plasma product pipeline is slim, with no expectation of significant earnings contribution
Investment research firm keeps fair value estimate at A$295, says stock screens “cheap”
Morningstar sees CSL’s margins to rebound from restructuring, new high-margin products and plasma efficiency initiatives that have yet to completely flow through
CSL down 35.3% so far this year, as of last close
