Ahead of its Global Healthcare Conference in the United States, this morning Goldman Sachs took a deep dive into its forecasts and target prices across its Australian healthcare coverage.
One company that came out of its review favourably was CSL Limited (ASX: CSL). According to the note, CSL remains the broker's top pick in the local healthcare sector and has increased its target price to $223.00.
This implies potential upside of around 9.4% from its last close price.
Why does Goldman Sachs rate CSL as a buy?
One reason Goldman is bullish on CSL is that it believes the strength the biotechnology giant is experiencing in Immunoglobulins outweighs operational risks.
The broker notes that the Immunoglobulins business is accelerating as its legacy products wind down. Further, recent industry feedback is consistently positive on the near/mid-term trajectory of Immunoglobulins.
In light of this, Goldman has "forecast double digit 3-year CAGRs for both Privigen (+10%) and Hizentra (+13%), driven by improved awareness/diagnosis and a positive shift onto the neurological indication, CIDP."
In addition, the broker notes that the current pricing environment is supportive and expects it to contribute to a stable gross margin development across the Behring business "despite the real threat from accelerating donor fee inflation and last litre."
Another reason to be positive is the company's Speciality products. Goldman has been positively surprised at the performance of this side of the business.
"Although Takhzyro (lanadelumab) is now widely available, Haegarda continues to take new patient starts in all markets in which it has launched. We continue to assume a distinct minority of new starts but relative stickiness in existing share."
Overall, the broker believes CSL is well-placed to grow its earnings per share at a strong rate through to at least FY 2021.
What about its peers?
The broker also reiterated its buy rating on Cochlear Limited (ASX: COH) and increased the price target on the hearing solutions company's shares to $209.00.
However, Goldman remains bearish on Ramsay Health Care Limited (ASX: RHC) and has once again rated its shares as a sell, albeit with an improved price target of $57.00. The broker has concerns over the decline in private health insurance participation rates and cost inflation, particularly with nurse wages.
