Why this top broker is 'cautious' on the outlook for CSL (ASX:CSL) shares

Here's what this broker expects from the CSL share price.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • Ord Minnett has reportedly dropped its price target and kept its 'hold' rating on CSL shares
  • The decreased price target reflects concerns about CSL's plasma and flu vaccine businesses
  • Though, another major broker recently slapped CSL with a price target 14% higher than Ord Minnett's

Top broker Ord Minnett has dropped its expectations for CSL Limited (ASX: CSL) shares by 9.5% today, reportedly citing concerns about its plasma and flu divisions.

The biotechnology company's stock has tumbled 12% since the start of 2022.

At the time of writing, the CSL share price is $257.66, 1.2% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is currently up 1.14%.

Let's take a closer look at what's undermined Ord Minnett's confidence in CSL's stock.

a woman rugged up in a woolen hat and gloves with a thermometer in her mouth props her hand under her chin as she looks dejectedly at the camera,, as though she is miserable from feeling sick.

Image source: Getty Images

Broker lowers expectations of CSL stock

The top broker has dropped its price target for CSL shares from $315 to $285, maintained a "cautious view" of the company's stock, and kept its 'hold' rating, according to reporting by The Australian.

The lowered expectations are reportedly a reflection of an anticipated gross margin drop from the company's plasma division.

The broker is also said to be expecting CSL's Seqirus – creator of the company's flu vaccines – to contribute less.

In financial year 2021, Seqirus' revenue increased 30% on a constant currency basis, driven by a record number of flu jabs administered.

The Australian quoted Ord Minnett analysts as telling clients:

We have reduced our [financial year 2023 (FY23)] [earnings per share (EPS)] forecast by 4%.

We have adjusted our Vifor forecasts to reflect the expected treatment of minorities and amortisation.

After these revisions, we continue to forecast a strong uplift in earnings in FY23 as plasma volumes recover and the Vifor business starts to contribute.

In December, CSL announced its bid to acquire Swiss company Vifor Pharma for US$11.7 billion ($16.4 billion at today's exchange rate).

However, not all brokers' expectations of CSL are falling.  

As The Motley Fool Australia's James Mickleboro recently reported, Macquarie analysts have slapped CSL shares with a $325 price target.

CSL share price snapshot

The CSL share price has limped into 2022, down almost 12% year to date. However, its medium-term performance isn't much better.

It has fallen 7% since this time last year. Though long term investors rejoice — it's has gained 124% since February 2017.

Motley Fool contributor Brooke Cooper 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.

More on Healthcare Shares

A couple sits on the bed in their hotel room wearing white robes, both have seen the bad news on their phones.
Earnings Results

What's going on with ResMed shares today?

The sleep disorder treatment company has released its third-quarter update this morning.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face.
Healthcare Shares

Resmed reports double-digit revenue and profit increases in Q3 FY26

Resmed posted double-digit revenue and profit growth in Q3 FY26, with management confident about continued momentum.

Read more »

a woman puts her fingers in her ears with a pained expression on her face with her eyes closed as though trying to block hearing bad news or an unpleasant loud noise.
Healthcare Shares

Cochlear shares crashed in April, but is a comeback looming?

This ASX 200 healthcare stock is caught between short-term pain and long-term potential.

Read more »

A medical researcher rests his forehead on his fist with a dejected look on his face while sitting behind a scientific microscope with another researcher's hand on his shoulder, as if giving comfort.
Healthcare Shares

What's making healthcare the worst sector on the ASX 200, down 39% in a year?

An expert outlines the key headwinds weighing on the industry and share prices today.

Read more »

woman testing substance in laboratory dish, csl share price
Healthcare Shares

Good news, falling shares: What's dragging this ASX stock lower?

In biotech, strong updates don't always push the share price higher.

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Healthcare Shares

Guess which ASX All Ords healthcare share is rocketing 18% in Thursday's sinking market

Investors are piling into the ASX healthcare share on Thursday. But why?

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Healthcare Shares

Mesoblast shares: Cash burn falls and Ryoncil® sales climb

Mesoblast reports higher Ryoncil® sales, improved cash management, and research milestones for the March 2026 quarter.

Read more »

A elder man and woman lean over their balcony with a cuppa, indicating share rpice movement for ASX retirement shares
Healthcare Shares

Regis Healthcare expects FY26 EBITDA to hit top end of guidance

Regis Healthcare expects top-end FY26 earnings as strong occupancy, RAD inflows, and efficiency gains set a positive outlook.

Read more »