CSL Limited (ASX:CSL) shares are expensive says top fund manager

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The CSL Limited (ASX:CSL) share price has gained almost 50 per cent over the past 12 months, making it one of the top performing ASX 200 shares in that period.

In August, the company reported a full year profit of $1.7 billion, up 29 per cent on the prior year, slightly ahead of expectations.

CEO Paul Perreault said he continues to anticipate strong demand for CSL’s plasma and recombinant products.

Writing in its August 2018 monthly update, the top performing Yarra Australian Equities Fund said it believes the current valuation of 37 times forward earnings more than reflects CSL’s strong product demand outlook.

The fund said CSL was conservative with its FY19 guidance, forecasting 10-14 per cent underlying net profit growth, with management delivering a confident narrative referencing growing markets, investment levels, their commitment to R&D, and the positive pricing environment.

The fund continues to view CSL as a quality franchise that operates in a largely rational industry structure with a strong product demand outlook, but believe this is more
than fully reflected in its valuation.

The Yarra Emerging Leaders Fund has an underweight position in CSL shares. The fund’s top overweight positions include SEEK Limited (ASX:SEK) and TPG Telecom (ASX:TPM).

Martin Conlon of Schroder Equity Opportunities Fund is also giving CSL shares a wide berth on valuation grounds.

CSL Limited shares don’t look cheap, but these 3 shares do…

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

CSL Limited was not one of them, but the list does include one tiny gold mining stock, and the company one top fund manager calls the cheapest stock in the ASX 100.

Find out why these 3 Cheap and Good Stocks could be better buys than CSL Limited. But you better hurry… these stocks may not stay cheap for long.

See the 3 stocks

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au