CSL – A Healthcare Gem

Chart Review

This is a daily, twelve month, candlestick chart for Healthcare stock CSL Limited.

Break-out to the upside from trading range.

Break-out to the upside from trading range.

Points to be made:

  • In the latter half of last year the share price trended higher from around $65 until it lost momentum and entered into a trading range this year with support emerging at $85, and resistance just over $96.
  • In the last three days of this last week, the share-price penetrated the $96.50 resistance level to reach a high of $99.33 before settling back to a close at $98.96, within easy reach of the awesome $100 threshold.
  • It may be noted that the penultimate candlestick created a “bearish engulfing pattern” on the previous candlestick suggesting that the excursion higher might be transient. However the week ended with the share price stronger instead of weakening as one might have thought.
  • The question arises as to whether this impulsive move higher will last, and the $100 barrier will be exceeded. To answer this question one should perhaps try and evaluate the ongoing significance of the week’s announcements, of which there have been two.

ASX Announcement 28 July 2015.

CSL Behring is the arm of CSL that manufactures a number of life-saving bio-therapy products for a variety of less common disorders including coagulation disorders such as haemophilia.

CSL has recently developed a form of the Factor VIII protein, the deficiency of which causes Haemophilia A, which has a longer half-life allowing patients to be treated with fewer infusions than previously. Recombinant technology has been used to create a more stable single chain protein from DNA which has met the required primary endpoints in a clinical trial. The US FDA organization will review the product for use there.

ASX Announcement 31 July 2015

CSL has now secured the necessary approvals to complete the acquisition of the influenza vaccines business of Novartis in the next few days, for US$275 million. This will catapault CSL into second place in manufacturing influenza vaccines. The industry is worth US$4 billion globally, with countries needing to stockpile vaccine supplies to counter the risk of lethal influenza pandemics. The Spanish flu pandemic of 1918-9 caused some 50 million deaths, and was the worst pandemic in recorded history. The most recent pandemic of the H1N1 variant of Influenza A in 2009 caused about 6,250 deaths.

CSL under its bioCSL subsidiary already manufactures FLUVAX vaccine for influenza, plus 17 other vaccines including Gardasil. In October 2015, bioCSL will be integrated with Novartis Influenza Vaccines to form a new subsidiary under the management of CSL’s CFO Gordon Naylor, known as Seqirus (from securing health for all of us), with a head office in Maidenhead in the UK.

Categories: Company review

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