CSL Limited (ASX: CSL) delivered another impressive result this week, increasing underlying net profit by 11% for FY14. Furthermore, CSL has forecast that strong earnings momentum will continue into FY15, forecasting profit before tax to increase by 15%. The result has impressed the majority of analysts, with UBS having a $85 price target on the stock, up from the current share price of $67.
The result was driven by robust demand for the company's blood plasma products which is expected to continue going forward. Analysts estimate that the global demand for blood plasma products is growing at over 10% per year and is set to continue on the back of surging demand from China. CSL will be a major beneficiary as it is one of the largest plasma fractionators in the world, with substantial operations in the United States, Europe and Australia.
CSL also delivers a range of other vaccines and pharmaceuticals, including seasonal flu vaccine. Over the long term, CSL intends to develop new products which are protected by its own intellectual property. CSL's significant investment in research and development should ensure it continues to develop high-margin products year-on-year.
Over the past decade, CSL has delivered shareholder returns of in excess of 700%, making it one of the best-performing large stocks on the ASX. The company is also currently conducting a huge $950 million share buyback program, which further benefits shareholders through increases in earnings per share. CSL should form a core position in any long-term focused portfolio and the current share price offers great value for such a quality, shareholder friendly company.
