The CSL (ASX:CSL) share price is down 8% in the past month, here’s why

This biotech giant’s shares are having a rough few weeks…

| More on:
disappointed and sad woman

Image source: Getty Images

The CSL Limited (ASX: CSL) share price has been out of form in recent weeks.

So much so, the biotherapeutics giant’s shares are down almost 8% since this time last month at $278.75.

This means the CSL’s shares are now in negative territory year to date with a 2% decline.

Why is the CSL share price down 8% in a month?

Investors have been selling down the CSL share price over the last few weeks following the release of a couple of reasonably bearish broker notes.

One of those came from investment bank Citi towards the end of June. According to the note, the broker has downgraded the company’s shares to a neutral rating with a $310.00 price target.

Its analysts made the move on valuation grounds, believing that its recovery was priced in on 23 June when the CSL share price was fetching ~$300.

Citi commented: “We move CSL to Neutral (from Buy) given the outperformance of the stock since March. We remain 15% ahead of consensus for FY23E, and believe that the plasma collection market will normalize this year. Our rating change is purely valuation based. Risk to the upside remains if the CSL112 phase III trial result due at the end of CY21 is positive.”

What else happened?

Also weighing on the CSL share price was a similarly mixed note out of Credit Suisse released two days later. According to that note, the broker downgraded CSL’s shares to a neutral rating and cut the price target on them to $310.00.

Credit Suisse warned that a short term de-rating of the company’s shares could happen due to potential margin weakness in the near term caused by plasma collection headwinds. The broker is forecasting a gross margin of 54.1% for its CSL Behring business in FY 2022, down from 61.2% in FY 2020.

CSL is likely to provide guidance next month with its full year results release. All eyes will be on those margins.

Should you invest $1,000 in CSL right now?

Before you consider CSL, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and CSL wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News