Weakness in vaccine division driving CSL lower

Morgans Financial Limited

CSL has been considerably weaker following its FY16 results announced 3 weeks ago (down c7%, after being down c5% on the day of its earnings release). So what gives? Well, recall FY16 underlying results were broadly in line with expectations, with solid growth across the core plasma businesses (c80% of total sales) and stable margins. However, there were two items the market focused on it clearly did not like (and still doesn't): Weakness in the newly branded Seqirus vaccine division (c15% of total sales), which reported a NPAT loss of US$206m on the back of a soft flu season and recent Novartis acquisition, stripping nearly 10% out of earnings; FY17 earnings outlook calling for NPATg c11%, below consensus expectations c19%. So it looks like share weakness is merely a case of the jilted lover(s)…use weakness to accumulate.


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