CSL Limited (ASX: CSL)

Trading at higher levels with an improved outlook - CSL competes on the global stage and is one of the largest and fastest-growing protein-based biotechnology businesses and is a leading provider of in-licensed vaccines. However, the company has recently upwardly revised its profit guidance for the full year. The management previously expected profit to rise by around 8.6 per cent to 12.1 per cent for FY18 but now it anticipates the growth to be between 17.7 per cent and 19.8 per cent to US$1,680 million and US$1,710 million at constant currency basis for the full year. Initially, it expected that it will generate net profit after tax for FY18 in the range of approximately $1,550 to $1,600 million USD at constant currency. Meanwhile, the Company issued 2,000 fully paid ordinary shares. The Company improved its outlook due to confluence of positive outcomes as it works to deliver towards its strategy. Seqirus is also performing well due to a severe northern hemisphere influenza season. In fact, phasing of investments in some of its clinical trials has also yielded a positive financial variance. Moreover, debt to equity ratio was moderately down to 1.16x in 1HFY18 from previous six months (1.26x).  The stock price has been climbing up (up by 33.64 per cent in one year) and moved up by 2.71 per cent as on 19 June 2018. The stock is inching towards its 52-week highest price and is trading at a higher PE level as compared to its peers. The stock seems to be “Expensive” at a market price of $191.65 and we look for any significant correction while the stock was down 2.4% in last five days.


Target Gearing Ratio Performance (Source: Company Reports)
 

Cochlear Limited (ASX: COH)

Stimulating market growth - Cochlear Limited is the global leader in implantable hearing devices that transform the way people understand and treat hearing loss. It is worth noting that hearing loss is prevalent and under-treated as in a recent study WHO estimated that over 5 per cent of the world’s population has a disabling hearing loss and by 2050 it is expected that it will rise to one in every ten people. The Group has been working towards its strategic priorities like towards its operational improvement and is making continuous improvement in R&D and is investing its 12 per cent of revenue. It is investing its operating cash flows to drive growth. It tries to maintain a strong balance sheet with a target dividend pay-out of 70 per cent of net profit. It builds on the clinical evidence that demonstrates the effectiveness of its products. Cochlear implants have been established as the standard of care for new born across many developed markets. The Group generated a net profit of $110.8 million for 1HFY18, which was down by 1 per cent as compared to same period in prior year. ROE declined from 23.8 per cent in December 2016 to 20.8 per cent in December 2017. The stock price rose up by 1.09 per cent as on 19 June 2018. The stock, which was down 3.3% in last five days, can be avoided as of now as it is trading at a higher level (at $ 194.350) and one can wait for some more positive catalysts while looking at a reasonable entry opportunity.


R&D Investment Trend (Source: Company Reports)

 
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