Bumper Day for Earnings | CSL Still Looks Solid

20 February 2019

Global markets were in positive territory overnight. On Wall Street gains in Walmart offset losses in financials, with trade talks between the United States and China in focus.

Locally, investor focus will also likely remain on local company profit announcements, as earnings season gets busier across Australia & NZ this week. It is a big day today with A2 Milk, Fletcher Building, Spark, Ebos, Woolworths, WiseTech and Sky TV all stocks under our coverage set to report earnings. 

Stock in Focus: CSL (CSL:ASX)

CSL shares were lower following another solid interim result for the 2019 financial year, and remain well below all-time highs hit in September last year. CSL has made it a habit to upgrade guidance in recent times, and given the market was anticipating a traditional earnings guidance upgrade is why CSL shares may have slipped on the result.

Looking at the details, the global biotech giant announced sales revenue increased +11% to US$4,405m and a +10% increase in net profit after tax to $1,161m. CSL saw strong revenue growth from its core immunoglobulin blood products, its flu vaccine business Sequiris, and new products Haargarda and Hizentra. For the 2019 full year, CSL expects net profit after tax to be on the upper end of its $1,880m and $1,950m guidance. 

With CSL’s established business divisions performing well and its flu business gaining momentum, growth is expected to continue with increased investment into new products and increasing plasma collection centres to meet growing demand. 

We maintain our BUY rating on CSL and continue to hold it as a solid defensive healthcare holding.


Australia & New Zealand Market Movers

The Australian share market was higher on Tuesday (ASX 200 index +0.28%) as the ASX 200 hit a 4-month high.

In stock news, Tech stock Altium saw its shares jump +20% after reporting better-than-expected revenue figures on the back of strong growth from China. ANZ led the gains from major banks after saying it wanted to boost home-loan lending to investors, admitting it "may have been overly conservative". In a first-quarter trading update, the bank said its home-loan portfolio had grown just 0.4 per cent in the year to the end of January. Blackmores shares fell hard on Tuesday after the vitamins group warned a serious slowdown in its China business would mean its second-half profits would be weaker than the first half.

The New Zealand market slipped yesterday (NZX 50 index -0.23%) as A2 Milk came under pressure after an analyst dubbed it overvalued and as weak Chinese sales by Australian supplements maker Blackmores weighed on the dairy company. Heartland Group declined on weaker-than-expected earnings. The lender reported a 6.5 percent increase in first-half profit but trimmed its guidance for annual earnings due to listing, restructuring and foreign exchange costs.


3 Things Markets Will be Watching this Week

  1. US Federal Reserve minutes are released Thursday morning AU/NZ time.
  2. Local earnings season continues across NZ and Australia this week.
  3. Minutes from the last Reserve Bank of Australia meeting are released on Tuesday.


Have a Great Day,


It is a big day today with A2 Milk, Fletcher Building, Spark, Ebos, Woolworths, WiseTech and Sky TV all stocks under our coverage set to report earnings. 

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