It has been an unusually disappointing 12 months for the CSL Limited (ASX: CSL) share price.
Since this time last year, the biotherapeutics company's shares are trading flat.
This compares to a 23% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.
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Why is the CSL share price underperforming the ASX 200?
Uncertainty is probably the best word to use to explain why the CSL share price is underperforming the ASX 200 over the last 12 months.
This uncertainty is being caused largely by plasma collection headwinds. Plasma is a core ingredient in many of CSL's life-saving therapies such as immunoglobulins. As this isn't something that can be made synthetically, the company must collect it from willing donors.
Unfortunately for CSL, the pandemic hit collections hard for a few reasons. One was people staying home to avoid contracting or spreading COVID-19, another was government stimulus payments. The latter meant that donors that donate for the financial reward suddenly had no reason to.
In addition to this, border restrictions in the US have meant that Mexicans have been unable to cross over into the United States to donate plasma.
This ultimately led to plasma collection centres having to raise payments to attract donors, putting pressure on margins. The big question, though, is how much pressure this will have on CSL's margins and ultimately the CSL share price?
What impact will plasma collections have?
According to a recent note out of Credit Suisse, it is expecting a reasonably large impact to the company's margins from these plasma collection headwinds.
The broker downgraded CSL's shares to a neutral rating late last month after estimating that the CSL Behring business could experience a large gross margin decline in FY 2022.
Credit Suisse suspects that its CSL Behring business could have a gross margin of 54.1% in FY 2022. This will be down from 61.2% in FY 2020.
In light of this, the broker revised its earnings estimates lower and cut its CSL share price target to $310. However, due to recent weakness in the CSL share price, this price target now implies decent potential upside of almost 11% over the next 12 months.
Whether CSL's ASX 200 underperformance continues, only time will tell. But no doubt its full year results and guidance for FY 2022 in August will have a major say in whether that is the case.
