URGENT UPDATE: Shares of CSL Ltd (ASX: CSL) have plunged dramatically following a disappointing trading update, raising critical questions about whether this is a buying opportunity. The biotechnology sector giant has seen its stock drop by over 30% in recent months, sparking urgent discussions among investors.
This sharp decline comes as CSL downgraded its revenue growth guidance for FY 2026 from 4-5% to just 2-3%. The company also announced a deferral of the potential spin-off of its struggling Seqirus business, which is heavily impacted by reduced demand for vaccines in key markets.
Analysts at Ord Minnett have responded to these developments, noting that CSL’s net profit growth forecast has also been cut from 7-10% to 4-7%. This adjustment reflects the challenges faced by its Behring division in China, where cost-saving measures from Beijing have taken a toll on demand for albumin products.
Moreover, CSL is bracing for further declines in vaccination rates in the U.S. market, with forecasts predicting a 12% drop in general population vaccination rates for FY 2026. As a result, revenue from its Seqirus division is expected to fall in the mid-teens percentage-wise, prompting the decision to delay its spin-off until market conditions improve.
Despite these setbacks, Ord Minnett highlighted some potential positives, including favorable currency movements that could mitigate the impact on net profit. However, they still revised their earnings per share (EPS) estimates downwards by 2.1%, 2.0%, and 1.9% for FY 2026, FY 2027, and FY 2028 respectively.
Investors are now left to ponder whether CSL shares present a viable investment opportunity. Ord Minnett has maintained a hold rating on CSL shares, adjusting the price target to $235.00 from the previous $258.00. This new target suggests a potential upside of 29% for investors over the next year, despite the ongoing volatility.
The broker emphasized that while there is apparent value in CSL, recent events—including new tariffs in the U.S.—mean that significant uncertainties remain. The company aims to recover its margins in the Behring business, but the complications from the Seqirus spin-off and other market pressures necessitate a cautious approach.
As investors weigh their options, the pressing question remains: Should you invest $1,000 in CSL right now?
Before making any decisions, it’s crucial to consider expert insights. Motley Fool investing expert Scott Phillips has recommended exploring alternative opportunities, revealing that CSL is not among the top five stocks he currently endorses.
With market conditions shifting rapidly, this situation is developing, and investors are urged to stay informed on the latest updates regarding CSL and the biotechnology sector.
Keep an eye on CSL as more information becomes available—this is a story you won’t want to miss.
