Category: Stock Market

Owners of Wesfarmers Ltd (ASX: WES) shares have received a pleasing level of dividend payouts over the years. After all, passive income from an ASX blue-chip share can be precisely the steady income-generating strategy that people are looking for.

Wesfarmers owns a variety of leading Australian retailers, including Bunnings, Kmart, Officeworks and Priceline.

Bunnings and Kmart Group (which includes Target) make enormous profits each year for the ASX retail conglomerate. In the FY24 first-half result, Bunnings made $1.28 billion of earnings before tax (EBT), while Kmart Group earned $601 million in EBT.

Profit is very important because that’s what funds dividend payments. So, how much passive income would $10,000 in Wesfarmers shares generate?

Potential passive income

Wesfarmers has a stated goal of increasing its dividend over time “commensurate with performance in earnings and cash flow“.

The company has highlighted that Bunnings and Kmart can provide customers with what they need during this high cost-of-living environment – good products at good prices.

Its ongoing profit growth could help push the annual dividend payment up slightly higher to $1.95 per share in FY24, according to Commsec. That would be a grossed-up dividend yield of 4.1% in the current financial year.

If an investor had $10,000 in Wesfarmers shares today, the 4.1% grossed-up dividend yield would translate to around $410 in dollar terms, including the franking credits. The upfront cash part of the dividend would be almost $290.

But, the dividend isn’t expected to stay below $2 per share for long.

The estimates on Commsec suggest the payout could rise to $2.13 per share in FY25 and $2.35 per share in FY26.

In FY25, the company’s grossed-up dividend yield could be 4.5%, which would mean $450 of grossed-up income with a $10,000 investment in Wesfarmers shares.

It could then have a grossed-up passive dividend income yield of around 5% in FY26 — that would mean $500 of grossed-up income with a $10,000 investment today.

Will owners of Wesfarmers shares see profit growth?

The retailer has proven its ability to deliver a slight profit rise even when some households are struggling in this economic environment.

Perhaps unsurprisingly, the Commsec forecast suggests EPS could rise to $2.23 in FY24, $2.43 in FY25 and $2.70 in FY26. If it does manage to reach that projected profit for FY26, it would mean the Wesfarmers share price is valued at 25x FY26’s estimated earnings.

The company is investing in areas like healthcare and lithium mining to grow and diversify its earnings, which may help the Wesfarmers share price in future years.

Past performance is not a guarantee of future performance, but Wesfarmers has a long-term track record of paying pleasing passive income and delivering capital growth as it expands its core businesses.

The post How much passive income would $10,000 in Wesfarmers shares generate? appeared first on The Motley Fool Australia.

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More reading

• Why Goldman Sachs rates Wesfarmers shares as a buy
• 5 things to watch on the ASX 200 on Wednesday
• The best ASX buys I’d grab to beat the market without a tonne of risk
• 2 safe ASX dividend shares that have paid income for decades
• Are Wesfarmers shares an ASX bargain buy or overvalued right now?

Motley Fool contributor Tristan Harrison 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 Wesfarmers. The Motley Fool Australia has positions in and has recommended Wesfarmers. 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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The ASX share market has generated returns of 10% per annum over the ultra-long term, which is why S&P/ASX 200 Index (ASX: XJO) shares could be the right place to invest $500 per month steadily.

We can’t become millionaires instantly unless we win the lottery, but the steady investment approach can lead to long-term success in a ‘get rich slowly’ strategy.

I’m going to outline how investing $500 per month could compound into a very pleasing amount over time.

Why ASX 200 shares?

The ASX 200 represents a list of 200 of the biggest businesses on the Australian Securities Exchange by market capitalisation. They are among the most significant in the country — even the world — at what they do.

For example, Commonwealth Bank of Australia (ASX: CBA) is the biggest bank in Australia, BHP Group Ltd (ASX: BHP) is the world’s largest miner, Goodman Group (ASX: GMG) is a global industrial property developer and owner, Telstra Group Ltd (ASX: TLS) is Australia’s biggest telco, and WiseTech Global Ltd (ASX: WTC) is a leading global logistics software provider.  

Thanks to their brand power or scale, the industry leader can often earn the biggest margins and profits. Ongoing re-investment in the business can deliver satisfactory profit growth and capital growth.   

Now, I don’t know what the shareholder returns are going to be for a specific company or the overall ASX 200, but I’m optimistic about the future. ASX 200 shares can continue to grow profit, with Australia’s growing population being a tailwind for earnings.

Invest $500 per month

The minimum investment that a broker normally requires for a trade is $500, so that could be a good starting amount to invest. Or, investors could save more and make a bigger investment – some brokers have a very low cost for a transaction with a value of under $1,000.

Using a compound interest calculator, if we invest $500 per month and that money returns an average of 10% per annum, it will turn into $1 million in just over 30 years.

If that’s not quick enough for you, there are two main ways to bring forward millionaire status. First, we could invest more – investing $1,000 per month would mean hitting $1 million in less than 24 years. That shows that simply investing an extra $500 per month can shave off six years of the timeframe.

We could also aim to invest in the best ASX 200 shares possible, which could increase returns. For example, investing $1,000 per month and having a portfolio return an average of 12% per annum could reach $1 million in less than 22 years.

In my mind, there’s no better time to start investing than now. The earlier we can start the ball rolling, the better.

The post Why I’d drip-feed $500 a month into ASX 200 shares, starting now appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
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• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tristan Harrison 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 Goodman Group and WiseTech Global. The Motley Fool Australia has positions in and has recommended Telstra Group and WiseTech Global. The Motley Fool Australia has recommended Goodman Group. 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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Zip Co Ltd (ASX: ZIP) shares are the best-performing companies in the All Ordinaries Index (ASX: XAO) in 2024 so far. Personally, I have never taken much of an interest in buying Zip shares, but the recent run has left me with egg on my face.

In less than four months, the Zip share price has flown from 64 cents to $1.41, a year-to-date increase of 127%. This is an incredible return compared to the benchmark’s paltry 3.1%. Overcoming the odds — namely high interest rates — Zip grew on all key fronts in its half-year results.

So, is it time I ate my words and invested in this enduring buy now, pay later (BNPL) business?

Interest rate relief for Zip shares

There’s no denying that Zip is moving in the right direction.

Operating costs at the Afterpay competitor have been falling for the past two years, losses are narrowing, and revenue is growing. That’s a great position for a company.

For the first time, potentially in its history, real profitability looks possible. At long last, there’s a chance Zip can prove its viability with genuine net profits after tax (NPAT). If it can do that, we can begin looking at it with less speculation and more fundamental analysis.

The optimist in me thinks falling interest rates could be the spark that sets profitability into motion.

Rate cuts before the end of the year are the general consensus among economists. Some are forecasting by August, and others are forecasting for December. Either way, the economic environment could soon be more conducive to BNPL spending.

Additionally, lower rates will help lighten Zip’s $2.5 billion debt burden.

Where’s the value?

Now for the more pessimistic side of my personality.

Regulation proposed by the Australian government could risk BNPL’s edge. The current proposals might mean Zip, Afterpay, and others must conduct credit checks and hold an Australian credit license.

Fortunately for Zip, it already conducts checks and holds a license. Still, I wonder how these companies differ from other credit providers. More importantly, how will they outcompete other options once on a level playing field?

The technology is hardly nascent. Payment giants such as PayPal Holdings Ltd (NASDAQ: PYPL), Apple Inc — heck, even our very own Commonwealth Bank of Australia (ASX: CBA) offers ‘pay later’ options.

My concern is that Zip and others might become just lower-margin lending businesses. In which case, it’s hard for me to see how Zip shares outperform traditional lenders long term.

The post Is it time to put Zip shares back on the table in 2024? appeared first on The Motley Fool Australia.

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More reading

• Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today
• 3 ASX All Ords shares up 50%+ in March
• Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher
• Up 71% in 3 weeks, have Zip shares topped out?
• Why is the Zip share price the best-performing ASX 300 stock so far this year?

Motley Fool contributor Mitchell Lawler has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended PayPal and Zip Co. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool Australia has recommended PayPal. 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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The Australian share market can be a great place to generate a passive income. However, if you’re not confident about stock picking, it can be intimidating.

But don’t let that stop you from earning income from the share market.

Especially when there are ASX exchange-traded funds (ETFs) available that can make your life easy by giving you access to large groups of dividend-payers with a single click of a button.

Three such ASX ETFs that could be worth considering are listed below. Here’s what you need to know about them:

BetaShares S&P 500 Yield Maximiser (ASX: UMAX)

The first ASX income ETF for investors to look at is the BetaShares S&P 500 Yield Maximiser.

This fund gives investors access to the top 500 companies listed on Wall Street. These are many of the world’s most recognisable brands and the titans of our age.

However, with a clever covered call strategy the actively managed fund has the potential to earn quarterly income that is significantly greater than the dividend yield of the underlying share portfolio.

For example, at the last count, its units were providing income investors with a trailing 4.8% distribution yield. This is much greater than the current average yield (1.35%) of the S&P 500 index.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another ASX income ETF that could be used to generate passive income is Vanguard Australian Shares High Yield ETF.

It gives investors access to a group of ASX-listed shares that have higher-than-average forecast dividends based on broker research.

Importantly, it does this with diversity in mind. While you will inevitably be buying a slice of miners and banks such as BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), you won’t just end up owning these types of companies. The ETF has strict limits on the proportion it will invest in any one industry or company.

At present, the Vanguard Australian Shares High Yield ETF has 72 holdings and trades with a dividend yield of approximately 5.2%.

Vanguard Australian Shares Index ETF (ASX: VAS)

Finally, income investors may also want to check out the very popular Vanguard Australian Shares Index ETF.

It is a low-cost, diversified, index-based exchange-traded fund that aims to track the ASX 300 index.

The ASX 300 index is home to Australia’s leading 300 listed companies. This includes the big players like BHP and CBA but also smaller names such as Dicker Data Ltd (ASX: DDR) and Rural Funds Group (ASX: RFF).

And while not all companies in the fund pay dividends, the ETF still trades with an attractive dividend yield of 3.9% at present.

The post Buy these ASX ETFs for a big income boost appeared first on The Motley Fool Australia.

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More reading

• Why this is my top Vanguard ETF to buy for the long-term
• Forget gold! I’d buy these top ASX shares to beat inflation
• Is the Vanguard Australian Shares Index ETF (VAS) a good long-term investment?
• Is the Vanguard Australian Shares ETF (VAS) just a big ASX bet on banks and miners?
• How is the Vanguard Australian Shares ETF (VAS) falling almost 1% today?

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All eyes will be on Pilbara Minerals Ltd (ASX: PLS) shares next week when the lithium miner releases its eagerly anticipated third quarter update.

Ahead of the release on Friday of next week, let’s now take a look at what the market is expecting from the company’s report.

Quarterly update preview

According to a note out of Goldman Sachs, its analysts are expecting Pilbara Minerals to report spodumene production of 173,000 tonnes. This will be down 1.7% quarter on quarter.

It is also a touch short of the consensus estimate of 177,000 tonnes of spodumene for the three months ended 31 March.

Goldman expects Pilbara Minerals to report spodumene sales volumes of 174,000 tonnes for the period, up 6.1% quarter on quarter. Once again, this is slightly lower than the consensus estimate of 180,000 tonnes.

What about lithium prices?

While production and sales volumes are important, the biggest impact on Pilbara Minerals shares from this report is likely to come from the price it commands for its lithium.

Unfortunately, Goldman Sachs believes that the company will report another sharp decline in the average realised spodumene price.

For the three months, it is expecting an average price of US$869 per tonne. This is down 21.9% quarter on quarter and 82% year on year.

As with the other metrics, the broker’s estimate is lower than consensus expectations. The market currently expects an average realised spodumene price of US$891 per tonne for the quarter.

One positive is that Goldman believes Pilbara Minerals will report a small reduction in its cash costs to A$630 per tonne. This is actually lower than the consensus estimate of A$666 per tonne.

Should you buy Pilbara Minerals shares?

As you might have guessed from its bearish view on both lithium prices and the company’s operating performance, Goldman Sachs doesn’t think investors should be buying Pilbara Minerals shares right now.

This week the broker has reiterated its sell rating with a lowly $2.90 price target. This implies potential down of over 25% for investors. It explains:

We are Sell rated on: (1) Valuation: where PLS remains at a premium to peers (1.2x NAV & pricing ~US$1,265/t LT spodumene; peer average ~1.1x & ~US$1,250/t), with near-term FCF continuing to decline on lithium prices and increasing growth spend (c.-10% FCF yield in FY24E, and c.0% in FY25-27E) and a significant premium out to FY30E vs. peers on both EV/EBITDA and EV/Production on broadly normalised production/lithium prices; (2) Doubling production over 5 years with further optionality, though more than priced in, where we continue to see risk that a Beyond P1000 expansion disappoints vs. market expectations on a combination of capex, size, or timing (study expected Jun-24 Q), with a P1400 spend of ~A$0.85bn taking total capex spend over FY24-28E to ~A$3bn, ~A$0.9bn ahead of consensus which already prices further expansion; (3) Funded for further growth opportunities and ongoing capital management, though on more modest cash balance.

The post Own Pilbara Minerals shares? Here’s your third-quarter update preview appeared first on The Motley Fool Australia.

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More reading

• Sell these ASX lithium stocks and buy this one instead
• Here is the earnings forecast to 2026 for Pilbara Minerals shares
• The best ASX shares to buy with $1,000 right now
• The ASX 200 lithium stock this fundie is backing for the global lithium comeback
• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro 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 Goldman Sachs Group. 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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The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Nanosonics. The Motley Fool Australia has positions in and has recommended Nanosonics and Smartgroup. The Motley Fool Australia has recommended Ansell. 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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The Bank of Queensland Ltd (ASX: BOQ) share price closed 1.15% lower today at $6.04 amid rumours the ASX bank share may be planning to sell one of its divisions.

But it was not the only bank share to dip on Wednesday. Shares in the Commonwealth Bank of Australia (ASX: CBA) were down almost 1% at the close of trade, while the ANZ Group Holdings Ltd (ASX: ANZ) and National Australia Bank Ltd (ANZ: NAB) share prices also slipped into the red.

The chart below shows that the BOQ share price has dropped by around 30% over the last three years.

Is the way forward for the bank to divest and simplify so that it can focus on its core offering of lending and term deposits? Time will tell.

Potential sale of auxiliary business unit

According to reporting by The Australian, speculation has been mounting that the Bank of Queensland is moving toward the sale of a business it bought from Investec almost 10 years ago. The business came with $2.4 billion in loans and $2.7 billion in deposits.

The acquisition — offering Australian professional finance, asset finance and leasing, and mostly servicing dentists and doctors — reportedly cost $440 million.

The Australian reported that analysts believed regional banks were under pressure to simplify their businesses, noting that Bendigo and Adelaide Bank Ltd (ASX: BEN) recently sold its stake in Homesafe and planned to sell out of Cuscal when it floats.

Upcoming report

BOQ will report its FY24 half-year results and dividend next week (17 April).

As my colleague James Mickleboro reported recently, broker Goldman Sachs expects cash earnings of $154 million from BOQ. That net profit is 6.1% lower than the consensus of analyst expectations of $164 million.

Goldman Sachs also tipped an interim dividend of 16 cents per share. This is 7.5% lower than the market’s expectation (17.3 cents per share) and would represent a 20% decrease year over year.

The broker thinks the net interest margin (NIM) could disappoint, as well as a smaller-than-expected loan book.

Broker UBS is also negative on the ASX bank share. It has a sell rating on the bank, with a price target of $5 – that implies the BOQ share price could fall this year by around 17% from where it is today.

UBS suggested BOQ could generate earnings per share (EPS) of 44 cents, which would imply the current BOQ share price is valued at 14x FY24’s estimated earnings. However, the bank could then achieve EPS growth each year between FY25 and FY28 until it reached an EPS of 66 cents in the 2028 financial year.

Of course, these broker forecasts about profit and share price are educated guesses — BOQ could perform much better or worse than expected.

The post Why are BOQ shares falling on a rumoured sale? appeared first on The Motley Fool Australia.

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• This ASX 200 bank share could drop 20%!
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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The good news for income investors is that there are a great number of dividend-paying ASX stocks to pick from on the Australian share market.

To narrow things down, let’s now take a look at three ASX 300 dividend stocks that analysts have recently tipped as buys.

Here’s what sort of upside and dividend yields you can expect from them in the near term:

Healthco Healthcare and Wellness REIT (ASX: HCW)

The first ASX 300 dividend stock that could be a buy is the Healthco Healthcare and Wellness REIT. It is a leading health and wellness focused real estate investment trust with exposure to attractive megatrends.

Morgans is feeling positive about the company and its outlook. So much so, it recently put a buy rating and $1.61 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 8 cents in both FY 2024 and FY 2025. Based on the current Healthco Healthcare and Wellness REIT unit price of $1.22, this will mean yields of 6.5% for investors.

Lottery Corporation Ltd (ASX: TLC)

Lottery Corporation could be another ASX 300 dividend stock to buy. It is the lottery company responsible for the OZ Lotto, Powerball, and Keno brands.

UBS is a fan of Lottery Corporation. It has been pleased with the company’s performance so far in FY 2024, highlighting that its revenue and earnings came in ahead of expectations during the first half.

In response, the broker retained its buy rating and lifted its price target to $5.75.

In respect to income, the broker is forecasting dividends per share of 17 cents in FY 2024 and 20 cents in FY 2025. Based on the latest Lottery Corporation share price of $5.10, this will mean fully franked yields 3.3% and 3.9%, respectively.

Orora Ltd (ASX: ORA)

Goldman Sachs remains positive on this packaging company and sees it as an ASX 300 dividend stock to buy. This is despite the release of a disappointing trading last week which led to earnings estimates downgrades and a trimmed valuation.

Goldman now has a buy rating and $3.00 price target on its shares.

Positively, the broker is also expecting the company’s beaten down shares to provide investors with some generous yields. It is now forecasting dividends per share of 12 cents in FY 2024 and 13 cents in FY 2025. Based on the current Orora share price of $2.23, this will mean yields of 5.4% and 5.8%, respectively.

The post Buy these ASX 300 dividend stocks for a passive income boost appeared first on The Motley Fool Australia.

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More reading

• Buy Telstra and these ASX dividend shares next week
• These ASX 200 shares could rise 20% to 50%
• Top brokers name 3 ASX shares to buy today
• 3 top ASX REITs to buy in April 2024
• Why Cettire, Harvey Norman, Orora, and ResMed shares are sinking today

Motley Fool contributor James Mickleboro 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 Goldman Sachs Group and Lottery. The Motley Fool Australia has recommended Orora. 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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If you are wanting to add some ASX 200 blue chip shares to your portfolio this month, then the four shares listed below could be worth a closer look.

These ASX 200 shares have all been named as buys recently by analysts and tipped to rise from current levels. Here’s what you need to know about them:

Brambles Limited (ASX: BXB)

The first ASX 200 blue chip share that could be a buy according to analysts is Brambles. It is a supply chain solutions company that specialises in reusable pallets, crates, and containers for shared use.

UBS is feeling positive about the company. In response to its stronger than expected first-half results in February, the broker put a buy rating on its shares with an improved price target of $17.10.

Transurban Group (ASX: TCL)

Over at Bell Potter, its analysts think that this toll road operator could be a top blue chip option for investors to buy.

The broker believes “the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators.” In addition, it highlights its current pipeline of growth projects is valued at $3.3 billion.

Bell Potter currently has a buy rating $15.90 price target on the company’s shares.

Treasury Wine Estates Ltd (ASX: TWE)

A third ASX 200 blue chip share for investors to look at is Treasury Wine. It is the wine company behind popular brands including Penfolds, Wolf Blass, 19 Crimes, and Blossom Hill. It also recently added to its portfolio with the blockbuster U.S. acquisition of DAOU Vineyards for a sizeable $1.4 billion.

UBS is also a big fan of Treasury Wine and sees a lot of value in its shares at current levels. In response to news that Chinese tariffs have been removed, last week the broker retained its buy rating with an improved price target of $15.25.

Xero Limited (ASX: XRO)

Finally, the team at Goldman Sachs believes that cloud accounting platform provider Xero could be a top ASX 200 blue chip share to buy right now.

The broker is very positive on the company due to its long-term market opportunity. It highlights that this comprises “100mn SMBs worldwide representing a >NZ$76bn TAM.” It also states that it is “positive on the company’s outlook given accelerating product pipeline and strong management team to capture overseas market share while balancing profitability.”

Goldman Sachs currently has a buy rating and $152.00 price target on its shares.

The post 4 ASX 200 blue chip shares to buy now appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Treasury Wine Estates and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Transurban Group, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Treasury Wine Estates. 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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The CSL Ltd (ASX: CSL) share price is up 1.3% in afternoon trade today.

Shares in the S&P/ASX 200 Index (ASX: XJO) biotech stock closed yesterday trading for $280.08. At time of writing on Wednesday, shares are swapping hands for $283.60 apiece.

As you can see on the chart below, that leaves the biotech stock down around 6% since this time last year.

As you can also see, CSL enjoyed a big rebound at the end of October, with shares up more than 22% since 31 October.

But for the CSL share price to hit $500 it would need to gain another 79% from current levels.

Is that achievable in just three years?

According to the analysts at Macquarie, it most certainly is.

Why the CSL share price could soar from here

As a bit of background, CSL has three operating arms: CSL Behring (the company’s blood plasma segment), CSL Vifor, and its Seqirus businesses.

The company acquired CSL Vifor, a global leader in iron deficiency therapies, in 2022 for US$11.7 billion.

While Vifor has been struggling to achieve growth since that acquisition, it’s the Behring division that Macquarie believes could help propel the CSL share price to new heights.

As The Australian Financial Review reports, Macquarie’s analysts believe the biotech giant is trading significantly below its 10-year average price-to-earnings (P/E) ratio. Macquarie expects CSL to trade back at historic P/E ratios amid annual earnings growth of some 15%.

That’s based expectations that CSL Behring will make up 90% of that earnings growth over the next five years.

As for the CSL share price hitting $500 in three years, the analysts said, “We see this as both attractive and achievable.”

Indeed, when CSL reported its half-year results on 13 February, CEO Paul McKenzie said:

For FY 2024, I am pleased to reaffirm our previous guidance. CSL’s underlying profit, NPATA is expected to be in the range of approximately $2.9 billion to $3.0 billion at constant currency, representing growth over FY23 of approximately 13% to 17%.

Scott Olsson, a portfolio manager at Firetrail Investments’ Australian high conviction fund, which owns CSL stock, is also bullish on the outlook for the CSL share price, citing a pullback in the high costs encountered during the pandemic alongside an improved outlook for the company’s plasma collections.

According to Olsson (quoted by the AFR):

We think CSL presents a buying opportunity now because the market is more sceptical on management than it has been in the past, and the Vifor acquisition is turning out to not be a great buy so far, but that’s a very small part of the business. I think the market is quite distracted on a few things.”

What are other experts saying?

Atop Macquarie and Firetrail, a number of other investment experts are bullish on the outlook for the CSL share price.

As the Motley Fool reported yesterday, Morgans has an ‘add’ rating and $315.40 price target on the ASX 200 biotech stock’s shares.

The analysts at UBS recently gave CSL the equivalent of a ‘buy’ rating, with a $330.00 price target.

Now, these are 12-month price targets, mind you, while Macquarie’s $500 a share forecast for CSL is a three-year prediction.

The post Can the CSL share price really reach $500 in just 3 years? appeared first on The Motley Fool Australia.

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More reading

• What could $5,000 invested in CSL shares become in 1 year?
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• 5 ASX 200 shares for trying to build wealth after 50

Motley Fool contributor Bernd Struben 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. The Motley Fool Australia has recommended CSL. 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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