Why did Jefferies slash its FY23 earnings forecast for CSL shares?

Two happy scientists analysing test results.Two happy scientists analysing test results.

The CSL Ltd (ASX: CSL) share price has strengthened so far in H1 FY23, gaining 7.5% over the past month of trade.

Meanwhile, the broader sector has pushed higher recently as well. The S&P/ASX 200 Health Care Index (ASX: XHJ) has also lifted around 7% in the past month.

Broker downgrades CSL earnings forecasts

Analysts at investment bank Jefferies have reduced their earnings per share (EPS) projections for FY23 in a recent note.

The broker now estimates CSL will achieve EPS of $2.81 per share for the full year. That’s a 6-cent reduction off previous estimates of $2.87.

However, the consensus of analyst estimates has projected CSL to deliver $2.49 in EPS for the coming 12 months.

Despite the downgrade, Jefferies still sits roughly 15% above the consensus with its bottom-line estimates for CSL. It also forecasts $3.40 in EPS for FY24 from the biotech giant.

Further, every analyst covering the company rates it a buy right now, according to Refinitiv Eikon data.

As such, momentum continues for the company. The CSL share price has opened in the green today and is currently trading at $292.13, up 1.88%.

The company generated $464 million in free cash flow (FCF) last half, with a 14% return on invested capital.

Investors realise a 1% yield on this FCF with a corresponding 1% dividend yield.

It also sits on a debt to asset ratio of 23%, with debt financing just 28% of the company’s total capital, according to calculations derived from CSL’s financial statements.

The consensus price target on the stock is also $316 per share, according to Refinitiv Eikon’s consensus data.

The post Why did Jefferies slash its FY23 earnings forecast for CSL shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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