What is pushing up the CSL share price?
Shares in biotech giant CSL have lifted nearly 4% in the past week.
Shares in biotech giant CSL (ASX: CSL) are among the top gainers on the ASX boards on Tuesday. The stock has now been on the up for the last 3 sessions, and in early trading on Wednesday was 1.3% higher at $290.15.
Why is the CSL stock price rebounding?
Part of the most recent gains in CSL can be attributed to the broader lift in healthcare stocks, which are considered defensive amid the sell-off in global markets seen over the past few sessions.
But CSL has also been in the spotlight for reasons specific to the company.
Its major blood products business is expected to see a return to pre-COVID-19 plasma collection levels, particularly as centres in the key US market return to normal operations as the country rapidly advances its vaccine rollout.
Plasma products are the key revenue driver for CSL, with its Behring business generating US$7. 8 billion in revenue in 2020.
The company is also set to benefit from its recent bulwark – manufacturing the AstraZeneca COVID-19 vaccine.
While Australia has recommended the use of the vaccine only to its over-60 population, the AstraZeneca vaccine has been the dominant vaccine used against COVID-19 across the world.
As a result, that vaccine is in high demand in many overseas countries, where COVID-19 is still rampant. Australia itself has already committed to donating 20 million vaccine doses abroad, assuring CSL of a steady income stream, but further contracts could significantly boost its earnings.
Greenback boosting earnings
Meanwhile, export reliant companies such as CSL are benefiting strongly from the recent weakness in the Aussie dollar against the US greenback.
The US dollar has held near multi-month highs against the riskier Australian dollar and British pound, as fears grow that a rampant coronavirus variant could upend the global economic recovery.
That combined with the growing outbreaks here in Australia has resulted in a 3.5% decline in the Aussie dollar over the last 3 weeks. That will likely boost earnings for companies like CSL.
The strong earnings potential is reflected in analyst estimates. Analysts at both Citi and Credit Suisse have a $310 price target on CSL shares, which implies a hefty upside from the current levels. Morgan Stanley has a price target of $271 a share.
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