I bought a bit today to start a defensive corner of the portfolio and am happy to continue buying on the way down for the next few weeks/month if that's what happens. I don't want to start a long-term position at a price when all my fellow investors are starred eyed about the future and bidding the price/multiple up accordingly. The five year post-Covid trading history suggests the only investors who have really done well here are those willing to hit 'buy' when the rest of the market was thinking otherwise. I'm seeing a lot of comments around about a drop to the 230-240 area; anything's possible and it's not that far off now, but those levels were tested by the Ozempic panic, and I don't think today's report is that bad.
I'm still getting across all the moving parts of the business but my simplistic take from today's result is:
- Behring is the engine room of the business and this did well, +15% in Ig sales
- Vifor has been the naughty child but this surprised (only slightly) to the upside. However you do have to take a bit of a leap of faith here that they can maintain their edge given the European patent roll off and the generic competition coming up - on the call they referenced three new competitors in the EU market (or about to launch). Based on my research CSL's rationale for buying the Vifor business when patents rolling off were looming was partly built on how difficult iron products are to manufacture, so does three competitors in the market already tally with that view? I'm not sure, but I thought the problem child did better than expected. Perhaps an underappreciated point: for all the bad press on the overpriced Vifor acquisition, isn't it interested that just as Seqirus has some wobbles, Vifor turns things around a bit. Looking at the long term, they're trying to diversify the earnings and that is the sort of thing that should command a higher multiple.
- Seqirus obviously looks ugly but as others have said, the vaccine exhaustion seems cyclical rather than structural. There is a lot of bad press about RFKJ being anti-vaccine but I think, as usual, it's an oversimplification of his position (note he had all his children vaccinated).
As for those pointing to 5% revenue growth and the current P/E - two comments. One: for P/E surely you should be looking at NPAT(A) growth, not just revenue, and two: take a look at the historical P/E. I've only tracked the financial back to FY16, but this is by far the lowest multiple it's been on for a long time. Nobody likes a "we'll have a big second half" but the share price has had to take a breather while the company grows into its valuation, and the last few months has gone a long way to helping that.
The company certainly looks interesting to me for the first time in a long time, but obvious commiserations to those who were buyers at higher levels. Still, this is a genuine world-leader that, at worst case scenario, you can leave to grow into its valuation if you have the patience, and the right weighting. Good luck.
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