@Solvetheriddle at what point does a new CEO come in, sell Sequirus and Vifor, and focus everything on Behring.

I wonder how many IB pitch packs have put that proposal to Paul McKenzie?

@mikebrisy yeah ive thought the same thing, and i think we are not alone. they did a good job adding value in Seqirus but its now probably better out of the stable. Vifor maybe too soon to admit an error, they will persevere for a while i suspect.

I think CSL is actually looking attractive. Behring continues to do its thing. Seqirus was the big letdown, which is always cyclical and really expected - bird flu preparedness revenue to be recognised in future periods should provide some floor against RFK. Jnr.

It was in bubble territory for the better part of a decade and people are getting to their lost faith point. Probably around fair value here now. With a market that's expensive I don't think that's bad.

Just listened to Intelligent Investor Podcast with John, Graham and Gaurav giving their views following results of $CSL, $AD8 and $COH,

Link to Podcast

You can hear Graham Witcomb's analysis of $CSL at the start of the podcast after the intro (so starting from about 00:55). Unlike a few of us here, he cotinues to be bullish, believing that after doing nothing for 5 years, $CSL now looks interesting.

For those interested in this viewpoint, but not wanting to listen to the podcast (I did while doing some domestic chores this morning) I got my BA ChatGPT to summarise Graham's key arguments as follows.

TLDR: @Mujo, I think it is fair to say that Graham agrees with you.

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Generated by Chat GPT from podcast transcript

Graham Witcomb believes CSL Ltd (ASX:CSL) now represents an attractive investment due to its strong performance in its core business segment, despite challenges in some areas. His key reasons and drivers include:

1. Strength in the Behring Division (Plasma & Antibodies)

• CSL Behring, the company's core division, has been performing exceptionally well.
• Antibody sales grew 15% this year, significantly above the market rate.
• Key products Privigen and Hizentra are in high demand and well-received by patients.
• The division remains the primary profit driver for CSL, offsetting weaknesses elsewhere.

2. Challenges in the Vaccine Division (Seqirus)

• Seqirus (Vaccine Division) faced a 9% decline in revenue, mainly due to decreasing flu vaccination rates.
• This trend is influenced by vaccine hesitancy and misinformation, exacerbated by political factors in the U.S.
• However, CSL is becoming more efficient in vaccine production and is shifting to a more specialized approach, targeting specific groups and commanding higher prices.
• The company is investing in mRNA vaccines, already launching one in Japan, ensuring it remains competitive in the evolving vaccine landscape.

3. Short-Term Weakness in Vifor (Iron Deficiency Treatments)

• The Vifor Division (focused on iron deficiency treatments) has underperformed, contributing to weaker sentiment.
• However, Witcomb believes these are temporary challenges that will not significantly impact long-term growth.

4. Valuation & Investment Opportunity

• CSL’s stock price has dropped from over $300 to around $260, partly due to concerns over vaccine sales and broader market uncertainty.
• The price-to-earnings (P/E) ratio has compressed, making it more attractively valued relative to historical levels.
• Witcomb sees this as an opportunity, arguing that the core Behring Division’s strength will outweigh temporary issues in vaccines and iron treatments.
• Over a 10-year horizon, he expects CSL to be substantially larger, supported by demographic trends and continued demand for its therapies.

Conclusion

Despite short-term headwinds in its vaccine and iron deficiency businesses, CSL remains a fundamentally strong, critical healthcare company with significant long-term growth potential. Witcomb sees the current lower valuation as a buying opportunity for investors, particularly given the robust performance of the Behring Division, which he believes will continue to drive CSL’s future expansion.

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I've plotted the P/E evolution of last 7 years below for context.

Disc: Not Held (Previously held)

I can’t say i’m a screaming bull, i think it’s fair value here, but i do expect it will outperform the asx200 given the outlook and valuations for banks and resources.

The Behring business continues to be the jewel and they should’ve just focused on that. Sequirus hasn’t been the worst but think they could’ve been just as good for shareholders without it, and Vifor screams of overpaid management itching to do something and as a result have destroyed value. That said i think Vifor should stabilise near here, but will continue to disappoint.

So what would it take for you to be a CSL buyer?

I generally try to focus on small/mids but CSL is at a level now of being attractive.

I think I may buy some in my SMSF but I tend to be a bit more short sighted and would wait to near the next results to have another look. Whenever you ask people on views, especially when thinking about ausbiz etc i 'd also ask what is their time horizon just as a pet aside point.

Looking at it through this framework, without a heap of work.

As I mentioned I think the P/E contraction is nearly over so can focus on the dividend and EPS Growth. Dividend is in the 1.5% range adjusted for debt and growing EPS in the 10% range you could get a 10-11%pa (brokers have mid-teens so a lot of upside if they're right) from here over a long enough time horizon. Assumes Behring continues to grow at 10-15%, Vifor can do 2-3% and Sequirus is stable.

I think the Macquarie price target of $500 from 12 months ago or whatever required on a PE expansion back to the last 5 year historical range but I think that's overly optimistic - and clearly wrong so far.