Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
CSL has commercial ducks lined up for a healthy 2025
With the biotech giant CSL (ASX:CSL) deep into the 2024-25 financial year, shareholders have good reason to be optimistic about the company’s share price trajectory in the wake of its 12-month performance to June 30, 2024, that was marked by robust growth in revenue, profit and dividends.
CSL concluded 2024 with a net profit after tax (NPAT) of $US2.64 billion ($4.13 billion), a 20 per cent increase at constant currency, and revenue, at $US14.8 billion ($A23.15 billion), was up 11 per cent. Key drivers included strong performances from CSL Behring, propelled by its immunoglobulin portfolio, and CSL Seqirus, which outperformed despite challenging market conditions.
Dividends were a highlight for shareholders. The total payout rose to $US2.64 ($4.13) a share, offering a steady stream of income for investors. This commitment to shareholder returns is reinforced by a robust balance sheet and solid cash flow generation.
Yet the share price failed to respond, up just 4.6 per cent for the past 12 months to close on Tuesday at $280.77. While that was somewhat puzzling earlier in the year, it’s more understandable now as CSL, like all Australian multinationals – and their shareholders – anxiously await what economic policies emanate from the administration of incoming US President Donald Trump.
If geopolitics doesn’t intervene, CSL’s ambitious earnings and revenue targets for 2025 look eminently attainable based on the outlook for its three strategic pillars for growth.
CSL Behring, which enjoyed 14 per cent growth in 2024, with strong immunoglobulin sales for products such as HIZENTRA® and PRIVIGEN® dominating their markets, rising patient demand and expanded supply chains. HEMGENIX®, the breakthrough gene therapy for haemophilia B, holds significant promise for 2025.
Paul McKenzie (pictured), chief executive officer and managing director, pinpointed robust CSL sales across all geographies – it operates in more than 100 countries – as a key driver of the 2024 performance.
The other two divisions are CSL Seqirus, a significant player in the influenza vaccine field, where, despite a challenging environment, it recorded a four per cent revenue increase, and CSL Vifor, which was acquired in 2022 and has taken in the markets of iron deficiency and nephrology.
McKenzie reiterated CSL’s commitment to a disciplined approach to cost management and operational efficiency to underpin growth.
“R&D investment remains robust, focusing on next-generation therapies that secure long-term competitive advantages. Selling, marketing and administrative costs are carefully managed to balance growth initiatives with profitability.”
When coupled with CSL’s financial resilience – it maintains a net debt-to-EBITDA ratio of 2.2, ensuring flexibility for future investments or acquisitions – and growing cash flow to support dividend payments.
Bell Potter has it as a buy with a $345 price target, predicting 2025 to be the start of a margin recovery phase for CSL, driving above-market earnings growth over the next few years. The company will also continue to deleverage the balance sheet over the next few years.
Morgans has an add rating and a $330 price target, offering considerable upside for investors if its prediction come true. The broker was pleased with its 2024 performance, arguing the results were broadly in line with expectations, with double-digit underlying top and bottom-line growth and strong operating cash flow.
“Strong plasma collections drove Behring sales, while Seqirus was soft on reduced immunisation rates, albeit above market, and Vifor grew modestly given follow-on products in some EU markets. We retain our add rating.”
