Will the CSL share price crack $300 in August?

Ken Hall | July 27, 2020 11:40am | More on: CSL

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Can strong earnings push the CSL Limited (ASX: CSL) share price above $300 in August? That’s what I’m wondering ahead of the Aussie biotech’s full-year results announcement.

Can the CSL share price crack $300?

I’m reasonably bullish on the CSL share price and its prospects in August.

Shares in the Aussie biotech hit a new record high of $342.75 per share as recently as mid-February.

However, the coronavirus pandemic impacts various industries in different ways. I think we could see a decline in blood plasma revenue in August but that will be more than offset across the company’s other business lines.

One potential barrier is the strengthening Aussie dollar, which could lead to hedging losses for CSL. However, healthcare and biotechnology are in high demand right now, which could help boost CSL’s earnings.

That may be all that’s needed to push the CSL share price beyond $300 once again.

What are CSL’s key service areas?

The key areas of focus for CSL are broadly split into plasma collections, commercial, and research and development (R&D).

The company’s April trading update flagged a decrease in plasma collections due to the pandemic.

However, the economic downturn could boost collections in the medium-term due to the payments system in key markets like the USA.

Positively, CSL reported no ‘stock-outs’, which means supply chains have been uninterrupted in 2020. The Aussie biotech’s Wuhan facility recommenced operations in April and CSL’s activities have hummed back to life.

I think much of the CSL share price value depends on the success of the company’s research and development activities.

That R&D has pivoted slightly with the advent of COVID-19. For example, CSL is partnering with the University of Queensland in the hunt for a vaccine.

However, I think R&D activities have largely continued on their planned course.

What else is driving the CSL share price?

CSL has also pursued inorganic growth opportunities through various recent acquisitions.

That includes the takeover of biotech company Vitaeris in June and purchasing a new late-stage gene therapy candidate from uniQure.

Both of these acquisitions represent further strategic avenues for the Aussie biotech company to explore.

If CSL can post a strong earnings result in August and demonstrate strategic integration and execution, I think the CSL share price can climb beyond $300 in August.