The CSL Ltd (ASX: CSL) share price is joining in the broader market rally today.
Shares in the S&P/ASX 200 Index (ASX: XJO) healthcare stock closed yesterday trading for $234.98. At time of writing shares are changing hands for $237.63 apiece, up 1.1%.
That's right about in line with the 1.2% gain posted by the ASX 200 at this same time.
Now, here's why Tribeca Investment Partners fund manager Jun Bei Liu is tipping the CSL share price to outperform over the longer term.
CSL share price could benefit from strong growth outlook
Liu offered her bullish outlook on the CSL share price at last week's Future Generation investment summit.
According to Liu (courtesy of The Age):
CSL has built a world-leading blood plasma franchise over the last 25 years via some well-timed acquisitions and a relentless focus on efficiency and a strong sales and marketing franchise.
She noted that over that quarter century, CSL has "faced numerous threats from competitive therapies and fluctuations in supply and demand which have weighed on investor confidence a number of times".
But Liu said that the company's management team and board were able to steer through those challenging periods, emerging "with a larger and stronger business".
Liu was also positive on CSL's growth outlook, citing its three distinct business segments:
CSL is three globally competitive businesses – blood plasma, influenza vaccines and injectable iron. This provides it with diversified, defensive earnings streams. All three businesses have solid medium term growth prospects.
Another reason she's bullish on the CSL share price outlook is the company's defensive nature.
"With economic prospects deteriorating in the face of rising rates and increased geopolitical threat we expect defensive stocks to come back into favour," Liu said. "And with signs interest rates are nearing a peak, we believe that the valuation pressure for a growth company like CSL should start to moderate."
While uncertain times can throw up headwinds for many ASX 200 stocks, Liu believes this will actually work in favour of the CSL share price.
"Historically, CSL has been most attractive during periods of investor uncertainty," she said.
And with new and competing therapies emerging across all three of CSL's business segments, Tribeca believes we're in such a period now.
Liu concluded:
I am confident these challenges can be navigated, noting that the management team has guided CSL to double-digit earnings growth over the medium term which indicates it is still a growth company.
The company reported its FY 2023 results on 15 August.
Atop the strong FY 2024 guidance from management, highlights included a 31% year on year increase in revenue (in constant currency), which reached US$13.31 billion. And net profit after tax before amortisation (NPATA) increased 20% (in constant currency) from FY 2022 to US$2.86 billion.
The CSL share price closed up 3.7% on the day of the results announcement.
