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CSL (ASX:CSL) share price falls despite 17% profit growth in HY24 result

The CSL Ltd (ASX: CSL) share price has dropped 3% after the company revealed its HY24 result which included good profit growth.

CSL is a huge healthcare business in the biotechnology industry, with vaccines and blood plasma being two of its primary focuses.

CSL FY24 half-year result

Here are some of the highlights from the six months to 31 December 2023:

Breakdown of the result

Plasma collections remained “strong” and the cost of collections, which included donor compensation and labour, continue to “trend down”.

A new roll-out plan for the RIKA plasmapheresis devices has been developed, with deployment across the US fleet expected over the next 18 months.

Looking at the individual areas, albumin sales rose 8% to $613 million, haemophilia product sales increased 8% to $662 million, specialty product sales (led by KCENTRA and HAEGARDA) increased 6% to $976 million, CSL Seqirus revenue rose 2% to $1.8 billion and CSL Vifor revenue was $1 billion.

The company said that while the strategic potential of CSL Vifor was “strong”, it has dampened its growth aspirations for CSL Vifor.

CSL was pleased that Seqirus delivered revenue growth against a backdrop of reduced rates of immunisation.

It said $669 million on research and development, which was an increase of 11%. This helps it develop the next generation of treatments, vaccines and so on.

Outlook for the CSL share price

The ASX healthcare share reaffirmed its previous guidance, where it expects underlying net profit to rise between 13% to 17%, to a range of between $2.9 billion to $3 billion.

CSL thinks it can keep delivering annualised double-digit earnings growth over the “medium term”.

It’s expecting its immunoglobulins business to keep growing strongly as patient demand remains strong.

CSL has a number of initiatives underway in plasma collections to improve efficiencies and processing times, which are aimed at growing the gross profit margin.

Its HEMGENIX gene therapy product is “attracting significant interest from patients and healthcare professionals and patient referrals have accelerated.” It’s expecting more patients dosed in the second half.

CSL said the vaccine business Seqirus has “performed well” in a challenging season, but it’s expected to post a loss in the second half.

I think CSL is a great business, but I don’t think it’s currently showing why it should trade on a higher price/earnings ratio (p/e ratio) than it is. Today’s fall comes after the large decline yesterday after a disappointing trial. If it dropped another 10% it could be more interesting, but I believe there are smaller ASX growth shares with more potential.

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