CSL Abandons University of Queensland COVID-19 Vaccine Candidate; FVE Unchanged

We maintain our AUD 254 fair value and earnings estimates for narrow-moat CSL. It has agreed with the Australian Government to not progress the University of Queensland's COVID-19 vaccine candidate, known as v451. As we called out previously, we had not factored any revenue related to v451 into our forecasts given the sheer number of candidates worldwide in clinical development and v451 still being early in a Phase 1 clinical trial. Although this is likely to save CSL on planned R&D investment, we expect any reduction to be modest and for the funds to be redirected to other candidates across its six therapeutic areas. Moreover, CSL does not anticipate any impact to its previously provided fiscal 2021 revenue guidance of 6%-10% and NPAT growth guidance of 3%-8%. Our forecast revenue growth of 10% and NPAT growth of 6% for fiscal 2021 are unchanged. CSL shares screen as overvalued, trading at a 15% premium to our fair value estimate.