Why Vaccine Deal Did Little for CSL Share Price (ASX:CSL)

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:

ASX CSL Share Price Chart 1

Source: tradingview.com

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.

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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:

ASX CSL Share Price - CSL Biotech COVID-19 Vaccines

Source: tradingview.com

As such the outlook for the CSL share price hasn’t changed much on the vaccine deal news.

Regards,

Lachlann Tierney,
For The Rum Rebellion

PS: Five Aussie Superstars Paying Top Dividends and Set to Thrive in the Post-Pandemic Era. Claim Your Free Report Now.


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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