MM’s view on CSL

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Question asked 29/01/2021

MM’s view on CSL

“Hi James. As a new member, here's my first query. In your weekend report you made a major point about inflation killing bull markets. By 'inflation' I presume you mean consumer price inflation. If so, you seem to be saying that consumer price inflation causes asset price deflation - i.e. share and property prices. This would imply that people would rather have more AUDs that are currently being printed at about $5B per week, than hard assets. I would also appreciate your present thoughts on CSL, because Bell Potter thinks it could fall below $200. I'm thinking of selling, in spite of recent falls.” - Regards Stuart C.

Answer

Morning Stuart,

Welcome to MM, we look forward to supporting your investment decisions for years to come.
With regard to inflation its more about the knock on effect i.e. once inflation picks up centrals bank historically raise interest rates / tighten monetary policy which reduces the comparative attraction of risk assets including equities. At this point in time employment is the most important factor to the RBA and Fed alike, once economies shake off the impact from COVID and move back towards full employment there should be no need for the current extreme measures of stimulus i.e. we believe good news on unemployment will damage stocks.
With regard to CSL we have been bearish for a while targeting the $250 area, at this stage we see no reason to change our view although I reiterate this is a great company but its price / valuation and is the issue.

The consensus price target across all brokers is actually $307, with Bells clearly a bearish outlier.

CSL

MM remains slightly bearish CSL targeting ~$250

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CSL Ltd (CSL)

LAST UPDATED 25/01/2021 16:13

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