The CSL Limited (ASX: CSL) share price has done the unthinkable and actually underperformed the broader S&P/ASX 200 Index (ASX: XJO) over the past month.
To be frank, CSL shares normally beat the pants off the market. It managed to do this both in the 2016–2020 bull market and in the short-but-sharp bear market we saw in February and March of this year.
But since mid-April, CSL shares have actually fallen around 10%, whilst the ASX 200 has rallied around 7% over the same period.
What's going on?
Has CSL lost its magic?
Well, in my opinion, the recent underperformance of CSL shares has nothing to do with the company itself. CSL hasn't yet told the markets if it expects any material hit to revenue or earnings as a result of the coronavirus pandemic (apart from disruption to plasma collections). CSL isn't actively joining the race for a COVID-19 vaccine, but (as Fool contributor Nikhil Gangaram pointed out today) the company is working on antibody-based medicines that will allow patients to recover faster without the use of a ventilator.
We do know that CSL has obtained additional capital (US$750 million at 2.68%) through the bond market recently, but again, this doesn't indicate anything of significance for investors in my view.
So no, I don't think CSL has lost its magic.
Instead, I view the pullback in the CSL share price as a sign that investors might have got a little ahead of themselves in April.
CSL shares reached lows of $270.88 in March, but by 9 April, CSL was back to $329 a share, just below the all-time high of $342.75 that we saw in February.
Given what's going on in the global economy, it's possible investors decided this run-up was a little optimistic, and that's why we are seeing a more subdued CSL share price in recent weeks.
Are CSL shares a buy today?
Although I've long thought CSL is a top company, it's also a little too highly priced for me to consider a buy today. Even on today's share price of $298.27, the company is still asking a price-to-earnings (P/E) ratio of 44.28. That's a fairly high number for the ASX's largest company, and one I don't think is entirely justified by CSL's future growth prospects.
I might be waiting a while, but CSL is still not in the buy zone for me, despite its resilience and quality as a business.
