CSL can’t outrun the bears after yesterday’s profit downgrade that resulted in a share price hammering. Pic: Getty Images<\/p>\n
CSL watchers slash their valuations, yet retain faith in an eventual turnaround
\nMedibank Private investors should Live Better now
\nDimerix\u2019s trial plans are on track<\/p>\n
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CSL (ASX:CSL)<\/a> analysts haven\u2019t exactly given up on the stock following yesterday\u2019s revenue and earnings downgrade.<\/p>\n But they\u2019re not convinced that the worst is behind the vaccines and plasma giant, either.<\/p>\n Citing the dire US vaccination climate, the company revised full-year revenue growth to 2-3%. This is compared with the 4-5% guided to at the company\u2019s August 19 full-year results.<\/p>\n Management trimmed net profit growth expectations to 4-7%, compared with the previously envisaged 7-10% increment.<\/p>\n The board has also shelved plans to demerge its Seqirus vaccines business.<\/p>\n CEO Paul McKenzie pointed to a likely recovery in the 2026-27 FY, while chairman Brian McNamee stressed the strategic direction for CSL and Seqirus was \u201cunchanged\u201d.<\/p>\n CSL shares plunged 16%, which broker Citi today dubs as \u201coutsized\u201d relative to the earnings downgrade.<\/p>\n But that\u2019s not the way it works. Indeed, the stock this morning lost a further 4% or so.<\/p>\n \u201cThe start to the flu season looks worse for vaccine uptake than expected, and there are headwinds for albumin [a key plasma derived product],\u201d Citi says.<\/p>\n \u201cWhilst we see upside on a 12-month view, we think investors are not yet convinced that this is a true clearing event and that CSL is now a \u2018show-me\u2019 story.\u201d<\/p>\n Paring valuations<\/p>\n Citi retains a buy call on the stock, but lowers its valuation from $265 to $230 a share.<\/p>\n UBS similarly maintains its faith, but pares the stock\u2019s worth from $300 a share, to $275.<\/p>\n The firm wants \u201cbetter confidence\u201d in the profit outlook for CSL\u2019s key Behring plasma division.<\/p>\n It also wants evidence that management has a plan to avoid potential US tariffs and pricing pressure. The latter could result from the Trump administration\u2019s \u2018most favoured nation\u2019 drug pricing policy.<\/p>\n Broker Morgans also retains a buy call, with a target price of $249 compared with $293 previously.<\/p>\n \u201cAlthough it remains challenging to know when US influenza vaccination rates will stabilise, we believe the risk of a permanently lower base is being over-priced,\u201d the firm says.<\/p>\n That\u2019s code for \u2018Trump (and RFK Junior) won\u2019t be in power forever\u2019.<\/p>\n \u2026 or will they, after a constitutional tweak?<\/p>\n Morgans adds that the Behring is valued well below its peers and its long-term average worth, \u201cwhich we see as unjustified\u201d.<\/p>\n \u00a0<\/p>\n Medibank Private aims for healthier profits<\/p>\n Encompassed in a 60-page summary, Medibank Private\u2019s (ASX:MPL)<\/a> \u2018health immersion\u2019 manifesto is all about emphasising primary care and wellbeing over the \u201chospital-centric curative model\u201d.<\/p>\n The insurer\u2019s measures include beefing up its Live Better health and wellbeing program. It also wants to move from generic care to a more personalised approach.<\/p>\n \u201cAustralia\u2019s healthcare system is one of the best in the world, but it is under pressure and urgently needs meaningful transformation to ensure we can keep up with the increasing needs in the community,\u201d Medibank CEO David Koczkar intones.<\/p>\n \u201cIt\u2019s time for the health system to shift from treatment to prevention, from hospital to community, from analogue to digital and from generic to personalised care.\u201d<\/p>\n The insurer targets boosting its primary health insurance market share to 26.8% from 26.5% now.<\/p>\n That seems a modest increment, but Medibank Private is already leader in a tough market for attracting new customers.<\/p>\n Through its wider wellbeing initiatives, the company hopes to service ten million people compared with five million now.<\/p>\n That all sounds fine \u2013 if not fluffy in parts.<\/p>\n But the headline message is the company\u2019s target of boosting annual earnings to $200 million by 2029-30, compared with $76.7 million last year.<\/p>\n So while the health system might be strained \u00a0\u2013 some say broken \u2013 health insurance can be nicely profitable in the right hands.<\/p>\n Investors weren\u2019t exactly immersed in joy, sending Medibank shares a tad lower.<\/p>\n \u00a0<\/p>\n Dimerix girds for pivotal FDA chat about endpoints<\/p>\n