Positions in CSL Ltd (CSL)
Hi Team, Is it time to say farewell to CSL?
The Latest Q&A
Answer
Hi Angus,
We looked at CSL briefly on Friday morning, we don’t believe its time to cut our CSL position but it has been frustrating of late. Ironically we received a plenty of scepticism when we sold CSL in mid-2023, currently an increasingly number of people are now doubting whether we should hold our position today, understandable as its effectively trod water for 6-months in a rising market.
The reason is incremental reductions in earnings forecasts by analysts (as shown in the chart below) ahead of their results on the 11th February. Given their last results in August were ~10% below expectations which led to a 4% move lower in the stock, it’s understandable why there is some concern. However, CSL goes into this result trading on an Est PE of 23x, its lowest multiple in 5 years and around ~30% cheap relative to the 34x it usually trades on, implying not a lot of optimism built in.
- MM is planning to stay long CSL for now but we are not adding to our position ahead of their results.
chart
CSL Earnings Estimates – Source Bloomberg
chart
CSL Earnings Estimates – Source Bloomberg
