It has been a bit of a mixed year for the CSL Limited (ASX: CSL) share price in 2020.
Although the biotherapeutics giant's shares are on the cusp of recording a gain of almost 5% for the year, it could have been so much more.
Prior to the pandemic, the CSL share price was up almost 25% year to date. But since then, the company's shares have gradually given back the majority of these gains.
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What happened in 2020?
CSL has actually had a very positive year all things considered.
In FY 2020, the company delivered a strong result and looks set to build on this in the current financial year.
For example, for the 12 months ended 30 June 2020, CSL delivered a 7.2% increase in reported sales revenue to US$8,797 million. This was driven by solid growth from both its CSL Behring and Seqirus vaccines businesses during the year.
CSL Behring delivered an 8% increase in constant current sales to US$7,661 million. The key driver of this was demand for its immunoglobulins, which recorded a 22% lift in sales to US$4,014 million.
Whereas Seqirus sales increased 11% in constant currency terms to US$1,297 million. This was driven by a 21% lift in seasonal influenza vaccine sales during the 12 months.
And thanks to margin improvements, CSL's earnings grew at an even quicker rate. The company's net profit after tax came in at US$2,103 million. This was up 17% in constant currency terms and 9.6% on a reported basis.
What about FY 2021?
Despite facing headwinds from the COVID-19 pandemic, CSL is forecasting further growth in FY 2021.
It is guiding to a net profit after tax of approximately US$2.170 billion to US$2.265 billion in constant currency. This implies year on year growth of 3% to 8%.
Why is the CSL share price underperforming?
There have been a couple of things weighing on the company's shares this year.
The first is the COVID-19 pandemic and its impact on plasma collections. Plasma is a key ingredient in its immunoglobulins products, which, as you can see above, contribute just under half of the company's overall sales.
Collections have been challenging because of lockdowns and social distancing initiatives, which has led to higher prices being paid for donations. This will have an impact on the margins of these products in the future.
Also weighing on its shares was recent news that it has pulled the plug on a potential COVID-19 vaccine that was undertaking clinical trials.
While the vaccine is believed to have been highly successful at fighting COVID-19, the molecular clamp component of the vaccine was triggering false positives for HIV.
Following advice from experts, CSL worked through the implications that this issue presents to rolling out the vaccine into broad populations. It generally agreed that significant changes would need to be made to well-established HIV testing procedures.
These changes were ultimately deemed too great, leading to CSL and the Australian Government agreeing the vaccine development will not proceed to Phase 2/3 trials.
Can the CSL share price go higher in 2021?
If analysts at UBS are to be believed, there could be strong gains ahead for the CSL share price in 2021.
The broker is positive on the company and has a buy rating and $346.00 price target on its shares. This price target implies potential upside of ~20% over the next 12 months.
