Why the CSL Share Price Broke Through $100 Today


What Happened to CSL Ltd’s Share Price?

Shares in Australia’s biggest biopharma company, CSL Ltd [ASX:CSL], hit a nice milestone in today’s bullish session on the Aussie stock market. CSL rose by nearly 2% today to finish above $100 per share for the second time.

CSL has passed the $100 mark once previously, in September 2007. Shortly after that achievement, in October 2007, shareholders approved a three-for-one stock split.

Since then, the company has enjoyed a fantastic run, more than doubling in value over the past three years.

Why Did This Happen to CSL Shares?

Yesterday morning, CSL completed its acquisition of the Novartis AG [VTX:NOVN] flu vaccine business.

The market got wind of this tie-up back in October 2014, but confirmation that the US$275 million transaction is a done deal gave CSL shares a lift. Investors approve of the scale that this deal will give CSL in a US$4 billion global market.

More broadly, CSL is a big player in industries with high barriers to entry that shows investors a real record of turning R&D spend into new products that deliver returns.

What Now for CSL Ltd?

CSL shares have had a great run because the firm is one of the best-positioned competitors in several attractive industries. Plenty of potential catalysts could propel CSL’s share price beyond $100 — including Chinese plasma demand growth and favourable currency movements.

But with the stock trading at lofty valuations by anyone’s standards, it’s hard to recommend opening a new position in CSL at these levels. You can get much better bang for your buck elsewhere in the Aussie stock market.

For deeper analysis on the Aussie stock market and global economy, keep an eye out for my essays in Money Morning — Australia’s biggest free daily financial e-letter.

Cheers, Tim Dohrmann
Editor, Money Morning

Join Money Morning on Google+


Leave a Reply

Be the First to Comment!

Notify of

Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.
If you would prefer to email the editor, you can do so by sending an email to letters@dailyreckoning.com.au