CSL +2.5%: caught a bid today as CSL Seqirus secured a contract to supply up to 15 million doses of cell-based adjuvanted pandemic flu vaccine to Canada — the first international pandemic contract out of its new Melbourne facility, and a meaningful validation of the significant capital invested in that site.
The contract is contingent on a WHO-declared pandemic so it won’t show up in near-term earnings, but that’s not really the point. What it does is reinforce the strategic value of CSL Seqirus as a global pandemic preparedness partner — an area where governments are increasingly willing to pay for guaranteed supply security post-COVID. The facility can produce over 150 million doses in a first wave, meaning the Canada deal is really just the opening chapter for what could be a growing book of international pandemic contracts.
CSL is undeniably a high-quality business and we have no issue with the company. However, after recently switching out of CSL and into ResMed, we see better upside potential from here in RMD —ResMed’s earnings growth profile looks more attractive at current prices.
- MM recently switched from CSL into ResMed (RMD) and remains comfortable with that call
MM is mildly bullish CSL ~$150
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