The market didn’t much appreciate CSL Ltd’s (ASX: CSL, OTC: CMXHF, ADR: CMXHY) fiscal 2014 first-half financial and operating results, sending the Parkville, Victoria, Australia-based biopharmaceutical’s share price sliding by 4.8 percent on the Australian Securities Exchange (ASX) from a AUD69.86 close on Feb. 11, 2014, to AUD66.50 by the close of trading on Feb. 13.

The longtime Conservative Holding, which was one of the first two Australia-based companies we picked in October 2011 to join the “Eight Income Wonders from Down Under” that comprised the AE Portfolio upon the advisory’s September 2011 debut, missed the consensus estimate among analysts for revenue growth and also trimmed its earnings growth forecast, establishing a rationale for the stock’s steepest slide in nearly six months.

The short-term selloff also gives us an opportunity for new money to establish positions in a solid global health care company with an outstanding record of raising its dividend, buying back shares and building wealth for its owners.

CSL, whose calling cards are its anti-coagulant treatments for patients with hemophilia, has been one of the top performers in the AE Portfolio, posting a total return in US dollar terms of 99.1 percent since we first recommended it.

The stock posted a 30.1 percent total return in Australian dollar terms in 2013. It was 11.8 percent to the positive when accounting for the decline of the aussie versus the US dollar.

Like other health care companies with significant exposure to the northern hemisphere, CSL’s financial results will benefit from a weaker aussie, as its costs are incurred primarily in Australian dollars while sales are generated in other currencies, chief among them the buck.

Management reported 3.7 percent sales growth to USD2.574 billion, while total income, which includes royalties, was up 4.8 percent to USD2.691 billion.

Earnings before interest and taxation (EBIT) were USD818 million, up 4.5 percent from USD783 million a year ago, while net profit after tax (NPAT) of USD646 million was up 3.4 percent from USD625 million.

The bottom line was hurt by a one-off charge of USD64 million related to the settlement of US antitrust class action litigation that management had previously announced. The settlement, related to artificial price increases, was made in October 2013.

Managing Director and CEO Paul Perreault remains optimistic about continued demand for plasma therapies: “Our current capacity expansions and product innovations put us in a good position for the future. Competition is vigorous, but I believe our philosophy of sustainable continuous improvement in everything we do is fundamental to dealing with these pressures.”

CSL Behring sales grew by 6 percent to USD2.4 billion, as immunoglobulin product sales were up by 7 percent. Hemophilia product sales fell by 4 percent. Specialty product sales grew by 16 percent.

Royalties were up 15.1 percent to USD78.7 million up from US$68.4 million.

Research and development (R&D) investment increased to USD229 million during the first six months of the fiscal year, reflecting continued spend as projects evolve into the later stages of clinical trials. As products move through into the later stages of development the more expensive trials become.

Cash flow from operations was USD513 million.

And CSL will pay an interim dividend of USD0.53, or approximately AUD0.59. That’s up about 6 percent in US dollar terms and 21 percent from AUD0.4866 a year ago, when the company was still reporting in Australian dollar terms.

Management had forecast earnings and revenue growth of around 10 percent in constant currency terms for the current financial year. And this guidance represented a slowdown from fiscal 2013, when NPAT grew 21 percent on the back of strong performance from the company’s core products of immunoglobin and Albumin.

In the company’s Feb. 12 announcement Mr. Perreault said that NPAT growth for fiscal 2014 is expected to be approximately 7 percent at fiscal 2013 exchange rates.

Last August, when CSL reported fiscal 2013 results, management noted that research and development costs were expected to grow faster than profit as several coagulation products currently in development near the point of commercialization. CSL expects to spend between USD400 million and USD450 million on CAPEX for fiscal 2014.

CSL’s track record in unlocking the value in its R&D portfolio is really the key to our recommendation. Management’s most recent R&D briefing included updates on new product label and geographical extensions as well as positive momentum in its Breakthrough Medicines portfolio, including CSL112, an innovative therapy for prevention of secondary heart attacks and acute coronary syndromes following the first attack that has a significant addressable patient population.

CSL will continue with its AUD950 million share buyback program that as of Feb. 12 was 22 percent complete. A series of recent share buybacks undertaken by the company has boosted a number of key return ratios for investors, including earnings per share and return on equity.

Competition in CSL’s primary markets is increasingly benign, particularly from Baxter International Inc (NYSE: BAX), which is experiencing delays in its plasma manufacturing contract with Netherlands-based Stichting Sanquin Bloedvoorziening that should help immunoglobulin sales.

And strong demand and stable pricing should further support sales for immunoglobulin as well as albumin products. Albumin sales have also benefitted from strong demand and pricing in China. The approval of Hizentra for a biweekly dosage by the US Food and Drug Administration (FDA) in September 2013 provides patient convenience and further support for growth.

CSL also received approval from Japan for the treatment of primary immune deficiency and secondary immunodeficiency with Hizentra, with sales commencing in January 2014.

Specialty Products should continue to produce double-digit sales growth driven by the success of Berinert, a unique angioedema therapy that in April 2013 received European Medicines Agency approval for use in the short-term, intravenous prophylactic treatment of both adults and children.

And Kcentra (also marketed as Beriplex) received FDA approval and orphan drug status in December 2013 for the urgent reversal of anti-coagulation achieved via CSL’s Warfarin therapy.

This is an important therapeutic advantage because there’s generally very little time to scale down Warfarin or other anti-coagulation therapies for patients involved in an accident, and that can lead to severe bleeding as patients enter into surgery.

The FDA’s granting of orphan-drug status gives CSL seven years exclusivity and blocks potential competitors from entering the US market.

R&D costs are increasing, but CSL’s development portfolio has been and will continue to be the driver of sales, earnings and dividend growth. At any rate, management’s guidance for near-double-digit constant currency income growth suggests margins continue to improve, supported by increasing scale, stable donor fees, better pricing and strong growth in high-margin Specialty Products therapies.

Despite the fact that the company had to pay a settlement, it is a positive that the US antitrust class action litigation is now behind CSL. No longer is this an issue in terms of distraction time and money for the company.

Management also announced that CSL will establish a sponsored, Level I American Depositary Receipt (ADR) program.

There are four non-company-sponsored ADR programs that give access to CSL’s stock, and these represent about 1 percent of the total share registry. (Approximately 20 percent of CSL’s share base is in the US.)

CSL plans to roll these unsponsored ADRs into a single sponsored program that will provide greater transparency for shareholders and allow CSL to engage is US ADR investors more completely as part of its regular US roadshow programs.

CSL is a buy under USD63 on the ASX using the symbol CSL and on the US over-the-counter (OTC) market using the symbol CMXHF.

CSL also trades on the US OTC market as an American Depositary Receipt (ADR) under the symbol CMXHY. CSL’s ADR, which represents 0.5 of an ordinary, ASX-listed share, is a buy under USD31.50.

CSL closed at AUD66.50 on the ASX on Feb. 13, approximately USD59.73 based on the prevailing Australian dollar-US dollar exchange rate. It last traded at USD63.12 under the symbol CMXHF on the US OTC market. The ADR last traded at USD30.09, down from USD31.76 on Feb. 11.

CSL’s fiscal year runs from Jul. 1 to Jun. 30.

The company reports full financial and operating results twice a year; it typically posts first-half results in mid-February, with full fiscal year numbers out in mid-August.

Interim dividends are usually declared in mid-February, along with, with payment typically made in early April. Final dividends are usually declared in mid-August, with payment made in early to mid-October.

Management declared an interim dividend of USD0.53 (approximately AUD0.59) on Feb. 11, along with fiscal 2014 first-half results. It will be paid on April 4, 2014, to shareholders of record as of March 12. Shares will trade ex-dividend as of March 5.

CSL’s final dividend in respect of fiscal 2013 was declared on Aug. 14, 2013, and paid on Oct. 4, 2013, to shareholders of record as of Sept. 13, 2013. Shares traded ex-dividend on this declaration as of Sept. 9, 2013.

Dividends paid by CSL are “qualified” for US tax purposes. Based on the “fiscal cliff” compromise reached in Washington, DC, in early January 2013 dividends will be taxed at Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

The Australian government withholds 5 percent to 15 percent, based on the US-Australia tax treaty on double taxation. The two countries have not taken the step of eliminating withholding from dividends paid in respect of shares held in a US IRA, as have the US and Canada.

Among the analysts who cover the stock 10 rate it a “buy” according to Bloomberg’s standardization of brokerage house recommendation terminology, while four rate it a “hold.” One brokerage that covers CSL rates the stock a “sell.”