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Highlights
- Stock Dip: CSL shares down nearly 1% in 2024, trading at AU$285.30, off July highs of over AU$312.
- Challenges Identified: Weighed down by the underperformance of Vifor Pharma and regulatory setbacks.
- Analyst Optimism: Brokers maintain a "buy" rating, citing CSL Behring as a key growth driver.
While the broader Australian market has reached new heights in 2024, biotech giant CSL Ltd (ASX:CSL) has had a challenging year. Its shares are down nearly 1%, currently trading at AU$285.30, compared to over AU$312 in July. Despite the decline, many analysts believe the stock is undervalued and see strong long-term potential.
Factors Behind CSL's Struggles
Several issues have impacted CSL's performance this year. One major factor has been the company’s acquisition of Swiss-based Vifor Pharma, which specializes in iron deficiency treatments. While the acquisition was initially met with enthusiasm, Vifor has underperformed, negatively affecting CSL’s earnings. The company’s financial results in August reflected these challenges, prompting a continued slide in share value.
Regulatory hurdles have also weighed on CSL. U.S. regulators raised concerns over the manufacturing processes for a new treatment in CSL’s development pipeline, resulting in delays and the withdrawal of clinical studies on three therapies. These regulatory and timing challenges have put additional pressure on the company's prospects.
Shareholder discontent has added to the company’s woes. At the recent annual general meeting (AGM), approximately 25% of shareholders voted against the CEO's remuneration package, signaling frustration with CSL’s performance this year.
Analyst Confidence Remains Strong
Despite these setbacks, analysts are broadly optimistic about CSL’s future. According to consensus data from CommSec, the stock has no sell ratings and remains a buy.
Citi, Bell Potter, and Morgans have all expressed confidence in CSL's long-term potential. Citi, for instance, has a AU$345.00 price target on the stock, highlighting robust growth in immunoglobulin and albumin sales as reasons for its bullish stance. The core CSL Behring business, known for its plasma-derived therapies, is viewed as a major growth driver that could help the company rebound.
Bell Potter shares this positive view, pointing to CSL's double-digit earnings growth potential as an attractive prospect, even in the face of short-term difficulties. The firm believes the current dip offers a compelling opportunity for investors to buy at a discount to CSL’s historical trading averages.
Morgans is similarly upbeat, valuing CSL at AU$330.75 per share and emphasizing the strength of CSL Behring. The broker's optimistic outlook is supported by a belief that the business’s core operations will remain resilient and deliver consistent growth.
