Why did the CSL (ASX:CSL) share price have such a lousy year in 2021?

Here’s what impacted the CSL share price last year.

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Key Points

  • ASX 200 Index outperformed CSL shares in 2021, 13% increase versus 2.6%
  • CSL achieved revenue growth despite challenging trading conditions
  • The global biotech expanded its asset portfolio with the acquisition of Vifor Pharma last month

Looking back at 2021, the CSL Limited (ASX: CSL) share price took investors on a rollercoaster ride.

In the 12 months of trading, the global biotech’s shares have gained roughly 2.6%. By compassion, the S&P/ASX 200 Index (ASX: XJO) leapt by more than 13% during the same timeframe.

At Thursday’s market close, CSL shares finished the day 0.51% lower to $281.70 apiece.

What happened to CSL during 2021?

The volatility in the CSL share price last year was driven by the company’s strong financial performance against a backdrop of difficult conditions brought on by the global COVID-19 pandemic.

Despite the uncertainty and complexities which CSL faced, its Behring and Seqirus businesses maintained all critical operations, delivering life-saving medicines. COVID-19 presented challenges for the collection of plasma, an essential raw material used in the production of its therapies.

Nonetheless, the company continued to implement multiple initiatives to mitigate this. This included opening new facilities to attract lapsed and new donors as well as marketing programs to draw back its existing customer base.

Furthermore, CSL highlighted that it spent more than US$1 billion on R&D activities in the past financial year. This consisted of new product development, market development, and life cycle management products.

A number of therapeutics were approved for use across Japan, the United States, Europe, Russia and Mexico. Most of these products came from CSL’s immunology and haematology portfolio.

To put this into perspective, the immunology division recorded $4,238 million in revenue, almost half of CSL’s entire revenue for FY21 ($8,547 million). On the other hand, haemophilia accounted for $1,107 million.

In addition, the company announced an institutional placement to raise $6.3 billion to purchase Vifor Pharma in December. This was Australia’s second largest equity raise, behind Telstra Corporation Ltd (ASX: TLS) for 2021.

The company also launched a $750 million share purchase plan, offering the same terms to retail investors at $273 apiece.

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

Understandably, with more shares being added to CSL’s books, this has inevitably diluted shareholder value.

Is CSL shares attractively valued?

A couple of brokers weighed in on the CSL share price during the final months of 2021.

Leading Australian investment firm, Morgans raised its 12-month price target by 3.2% to $334.70 for CSL shares. Based on the current share price, this implies an upside of about 18.8% for investors.

Analysts at Citi had a more bullish outlook on the company’s shares, improving its rating by 4.6% to $340. From where CSL trades as of yesterday, it represents an uplift of 20.7% over the next 12 months.

Clearly, both brokers believe that there is strong value in the CSL shares at current levels.

A recap on the CSL share price

No doubt it has been a frustrating 12 months for CSL shareholders. Traditionally, its shares outperform the broader market, however, this has not been the case since the onset of COVID-19.

While hitting a low of $242 in March last year, the company’s shares have staged a choppy rebound for now. There is currently a support level around the $275 mark for CSL shares.

Motley Fool contributor Aaron Teboneras owns Telstra Corporation Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. 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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