Our FY18-20 NPAT estimates decline up to 1.6%, mainly on higher opex and interest expense. However, with >10% total shareholder return, we upgrade to an Add rating and continue to view CSL as a core holding. 

CSL Limited's FY17 underlying results came in above guidance, supported via solid core plasma sales, with margins up on higher value products and efficiencies.

Above-market growth in core Ig and Specialty segments, helped by 1H competitor stumbles, along with strong uptake of haemophilia B product Idelvion and an on-track turnaround Seqirus vaccine division, all underpinned the strength.

Despite second half weakness (as we expected) and FY18 looking like a reinvestment year (as we also expected), it appears more than captured in the outlook, which may ultimately prove conservative given CSL's market leading breadth, diversity and multiple new product launches.

Contributed by Derek Jellinek, Senior Analyst, Sectors Covered: Healthcare:  (VIEW LINK)