At time of writing the share price of CSL Ltd [ASX:CSL] is up marginally by .47%, trading at $280.36.
As you can see, from its previous high in April after the March market lows, the CSL share price briefly snapped a downtrend in late August and subsequently slumped:
We look at the deal CSL struck to deliver a vaccine and why its share price barely budged.
Australia’s a small country and CSL vaccine deal makes up a fraction of its revenue
Here are the details of the deal:
- Supply agreement for University of Queensland vaccine (UQ) — 51 million doses
- 30 million doses of AstraZeneca if the UQ vaccine is unsuccessful
- Two deals worth $1.7 billion
$1.7 billion sounds like a lot but it’s still a fraction of its overall revenue.
Last financial year CSL made nearly US$8.8 billion.
You would expect more of an uptick though.
Previous vaccine deals for companies like Moderna Inc [NASDAQ:MRNA] and BioNTech SE [NASDAQ:BNTX] sent their share prices flying.
Part of this could be due to the fact Australia is a small country and the scope for expanded rollout of doses is more limited.
Some valuation metrics and CSL’s share price outlook
As it stands, CSL has a price to earnings ratio (P/E) of 40.6.
For a mature business this is relatively high.
Last financial year their revenue grew by 7.2% and their profit improved by 9.6%.
The year before, revenue was up 8.1% and profit up 9.6%.
It’s a lucrative business the blood plasma business, but it’s possible that the best growth years of Australia’s biggest company on the ASX are behind it.
A dividend yield of 1% means it’s not exactly an income superstar either.
The downtrend we saw from April may continue, and if it does support may be found around this mark:
As such the outlook for the CSL share price hasn’t changed much on the vaccine deal news.
For The Rum Rebellion