strong move, page-41

I'll be very surprised if CSL doesn't surprise on the upside.

I was looking at some numbers this morning.

CSL guidance is for NPAT pre items being $1020m to $1060m. That guidance was given on two key assumptions:

1. FX at AUD:USD of 0.67 vs 0.82/0.83 spot (along with the same appreciation trend with the other key currencies for CSL)

2.Gardasil royalties were lower than forecase by the brokers last year and CSL guidance was using this assumption. (I've commented on this before in relaiton to Baxter and Merck's results out of the US)

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So the takeout for me (and I read a good broker view to this effect as well) is that CSL mgmt has "baked in" to its guidance a fairly conservative level because these two factors together provide a $66m drag on NPAT.

On that basis I'm really comfortable that they'll at least come in within the guidance range. This at the very least will remove the fears around lower pricing in the IVIG market. On top of this there is the real possibility of a beat.

I'm more concerned about the outlook. Thats where I think the real re-rating could come from. If CSL comes out the re-interates its current growth trajectory, then this puppy is off to the races via the PE expansion back towards its historical norms approaching 20 rather than around 16.

I don't think you'll see CSL trading at 22-24 like it use to because that had priced in the Talacise acquisition which was massively accretive.

I'm currently long CSL.