Another poor week for global investors - Dow down 4.0%, FTSE down 5.3%, DAX down 8.6%. Although the All Ords was down 4.0% in the four days to Friday, we still have Monday to deal with after European and US stocks continued to fall overnight.

With fear reigning supreme, where does that leave Australian investors? As outlined a few weeks ago, the most important thing investors need to consider right now is the risk level of their portfolios. Now is not the time to be betting the house on a hot junior miner or punting that retail and media stocks will make an about face. In the table below of 23 buys from brokers Australia-wide the fact that there are just three miners (Hillgrove, Aquarius & Mt Gibson), two retailers (Westfield & Oroton) and no banks or media stocks tells the tale.

With major investment banks downgrading their outlook for the global economy and poor data continuing to pour out from Europe and the US, this is almost certain to have a flow on effect to the Australian economy. And, more importantly, to investor psyche. The drastic plunge brought on by the GFC was a mere three years ago and remains a clear memory for those who were burnt in the process.

Skittish investors are running for defensive assets, with the surge in gold to almost $18,080 an ounce highlighting the high level of fear. Not that the answer necessarily lies in yellow metal, which many anlaysts believe is looking toppy after an 11-year bull run.

Instead brokers are moving their buys toward biotech and IT stocks such as CSL, Primary, Biota, Webjet, iiNet and Reckon, as well as heavyweights Telstra, Leighton, Westfield and Tabcorp. See the table below for the full list of buys and target prices.

This week we investigate why biotech giant CSL is so heavily featured on broker buy lists.

CSL, a buy from Citi, $39.33 price target

Citi - BUY, $39.33 price target

UBS - BUY, $44.00 price target

State One Stockbroking - BUY

Patersons Securities - BUY

Austock Securities - BUY

Perennial Growth High Conviction Fund - BUY

Nomura Capital - BUY

Merrill Lynch - Neutral, Medium Risk, $32.85 Price Target.

Chart: Share price over the year to 19/08/2011 versus ASX200 (XJO)

The biotechnology sector is high risk, but so are the rewards. Plans for a new drug can take years to develop and burn a lot of cash a long the way without any guarantee of success. However, new drugs are regularly coming to market, so investors will always be tempted to take a chance on a biotech with potential.

James Georges, of Patersons Securities says the United States and Australian biotechnology sectors have experienced a slowdown in new listings compared to the heady days of the technology boom. Since then, many biotechs across the world have failed in the absence of capital. Companies that survived the “tech wreck” have demonstrated resilience and good management, and that gives investors more confidence to lift their risk appetites amid a possibly brighter economic outlook.

Australian biopharmaceutical products maker CSL operates in 27 countries, including the US, Switzerland and Germany. CSL develops, makes and markets biopharmaceutical products. Georges says the blood plasma industry has consolidated into a few fully integrated global suppliers. Scale of operations, control of supply and integration of services – from blood collection to product manufacture – gives CSL a competitive advantage that’s difficult to replicate. Industry consolidation led to favourable pricing and lifted returns. CSL’s human papillomavirus (HPV) vaccine offers another earnings stream, while it generates royalty revenue from Merck’s Gardasil and GlaxoSmithKline’s Cervarix. “A strong industry position makes it one of Australia’s best businesses and it should be a core portfolio stock at today’s price,” Georges says. He says the strong Australian dollar has been a headwind, so investors could find solid long-term value here, particularly if the currency falls.

It seems that the currency isn't the only risk to CSL, as the vaccine and drugs maker has found itself an unwitting victim of the financial crisis gripping Greece. CSL revealed last week that the fallout from the crisis had spread to its balance sheet because Greece's state-owned hospitals could not afford to pay millions of dollars worth of bills.

The Melbourne-based biotech had supplied Greek hospitals with various products to treat haemophiliacs and trauma patients but was still waiting for the bills to be paid four years later. CSL was worried it would never recover the money and sold the bonds at a discount, forcing it to write off $25 million in its accounts for 2010/11. "You have to describe it as collateral damage," said CSL managing director Brian McNamee. "Over a number of years we have been selling important and life-saving medicines to the Greek population through government-owned hospitals. They seem to have a habit of not wanting to pay very rapidly."

Details about CSL's Greek tragedy emerged as the company reported a 10.7 per cent drop in net profit to $940.6 million for the 12 months to June 30. The main reason for the fall was $116 million worth of unfavourable foreign exchange movements for the company, which generates 90 per cent of its profits overseas. On a constant-currency basis, operational net profit rose 13.6 per cent to $1.06 billion. Dr McNamee said CSL had been caught in a "perfect storm" of currencies that could again affect profits in 2011/12. Despite this, he still expects a 10 per cent profit increase if exchange rates stay around the same levels.

Despite the headwinds, James Cooper of Morningstar is bullish on the pharmaceutical and blood plasma giant. "Control of supply, scale of operations and integration of services from blood collection to product manufacture gives CSL a competitive advantage that’s difficult to replicate," he says. "Industry consolidation has led to favourable pricing and increased returns."

State One Stockbroking’s John Rawicki says CSL’s human papillomavirus (HPV) vaccine adds another earnings stream to supplement its existing royalty revenue from Merck’s Gardasil and GlaxoSmithKline’s Cervarix. “With an exemplary and vertically integrated business model, CSL has conquered the high barriers to entry and resides in a strong competitive position,” he says. “CSL holds a suite of valuable patents that generate strong cash flows, further bolstering its balance sheet and placing it an enviable financial position.” 

Michael Heffernan, from Austock also has a buy on the stock. Heffernan sees this global blood products maker and vaccines producer as offering a solid long-term opportunity. “The prospect of a stronger US dollar is likely to be positive for CSL’s profitability,” he says. “The future looks promising for CSL, as it always has its foot on the research and development accelerator,” he says.

Meanwhile UBS retained its buy rating on CSL complete with a $44 target price - a 33% premium to the current share price - after positive trial data that its liquid immuno-globin product Privigen may be useful in treating Alzheimer’s.

Based on Thomson Reuters data, 8 analysts have a buy on CSL, 6 have a hold and 3 have a sell.

Stock code: CSL

Charts: CSL Limited

More news: CSL Limited

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