Why did the CSL (ASX:CSL) share price go backwards in December?

The company’s shares are struggling to stay afloat this month.

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The CSL Limited (ASX: CSL) share price has gone on a mini rollercoaster ride since the start of December.

Over the past month, the global biotech’s shares have lost around 4.5%. By compassion, the S&P/ASX 200 Index (ASX: XJO) has gained almost 4% during the same timeframe.

At Thursday’s market close, CSL shares edged 0.19% lower to $292.50 apiece.

What’s weighing down CSL shares?

A couple of factors have had a negative impact on the CSL share price, sending investors to hit the sell button.

Firstly, the rapid spread of the COVID-19 Omicron variant could spell a sluggish economic recovery for Australia. There are record cases being detected around the country, particularly in New South Wales and Victoria.

New restrictions have been introduced across the southern states, which are the main drivers of the Australian economy. This could potentially lead to reduced foot traffic in CSL’s plasma collection centres.

In addition, the company recently announced an institutional placement to raise $6.3 billon to purchase Vifor Pharma. To put this in perspective, this was Australia’s second largest equity raise, behind Telstra Corporation Ltd (ASX: TLS), and the world’s seventh-largest for 2021.

The listing price of $273 per share sees about 23.1 million new CSL shares brought onto its registry. The company also launched a $750 million share purchase plan, offering the same terms to retail investors.

However, when the company’s shares came out of a trading halt on 16 December, investors dumped the CSL share price by 8.16%. This was the company’s biggest one-day decline since the beginning of the pandemic in March 2020.

With more shares being added to the company’s books, this has inevitably diluted shareholder value.

The CSL share price could be an attractive buy for the medium-term. Analysts at Morgans raised their price target by 3.2% to $334.70 on Thursday.

Based on CSL’s last closing price, this represents an upside of almost 15%.

CSL share price summary

Over the course of the past 12 months, CSL shares have failed to take off, posting a gain of just 1%. The company’s shares are currently sitting just below the mid-range of $242 to $319.78 achieved over the year’s timeframe.

On valuation grounds, CSL is the second largest company on the ASX with a market capitalisation of roughly $140.03 billion.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns 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.

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