The CSL share price had a strong first quarter. What's next?

The biotech company continues to push sideways over the longer time frames.

| 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
  • CSL shares have clawed back some losses incurred earlier this year
  • The biotech giant has rallied since June, however still trades either in line or at a premium to industry multiples
  • In the past 12 months, the CSL share price has held just a 1% gain. 

The CSL Limited (ASX: CSL) share price managed to regain strength and claw back some losses during the first quarter of FY 2023. It gained almost 6% from the close on June 30 to $285.02 at the end of September.

The share continues in a long-term uptrend after bottoming on 15 February at $243 apiece. At the time of writing on Friday morning, it is at $291.06.

Stepping back, CSL has traded in a sideways channel since peaking in February 2020, while the All Ordinaries Index (ASX: XAO) has been cyclical, as seen below.

It is also up by just 1% in the past 12 months.

TradingView Chart
A CSL scientist looking through a telescope in a lab

Image source: Getty Images

What's next for CSL?

Investors continue to rally the CSL share price from its February 2022 bottom despite a few blips along the way.

As such, analysts continue to see value in the share on a forward-looking basis. According to Refinitiv Eikon data, 13 out of 16 analysts rate the biotech giant as a buy right now, with the other three saying to hold.

The consensus price target from this list is $318.93, suggesting a return potential of almost 10% at the time of writing.

CSL is also forecast to trade on a dividend yield of 1.4% for the next 12 months, slightly behind the GICS Industry Health Care Industry median forward yield of 2.02%.

In addition, CSL trades at 40.7 times price-to-earnings (P/E) ratio, in line with the peer median's P/E of 39 times.

However, it's trading at a discount compared to fellow industry ASX healthcare heavyweights Cochlear Limited (ASX: COH) and Ramsay Health Care Limited (ASX: RHC). They are priced at 46 times P/E and 51 times P/E, respectively.

The share is also priced at 6.6 times the price-to-book (P/B) value – above the industry median of 2.8 times — and delivered a return on equity (ROE) of 19.65% in FY 2022. However, at the lofty 6.6 times P/B multiple, the ROE to investors is 2.97%.

Point is, from what the market data suggests, it appears to be the status quo for CSL at the time being.

This corroborates what we're seeing on the CSL share price chart as well, with price action remaining relatively neutral of late.

For instance, CSL is valued in line with the industry across several multiples, and trades at a premium to others.

What does this mean for the CSL share price?

Analyst price targets are bullish but with the consensus estimate of just 10% of upside potential, while the forward dividend yield is below the industry average.

Furthermore, equity markets are currently experiencing a large drawdown from the highs of 2021, and there's no telling when the market rout will end.

With these points in mind, the biotech giant has some work to do before investors rapidly change their minds about the CSL share price.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in 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 Scott Phillips.

More on Healthcare Shares

Woman flexes muscles after donating blood.
Healthcare Shares

CSL shares: 1 number that investors shouldn't ignore

This one number has me rethinking a CSL investment.

Read more »

A woman's hair is blown back and her face is in shock at this big news.
Healthcare Shares

CSL shares rebound 79% from multi-year low: Here's what brokers tip next

The ASX biotech company announced its FY26 results yesterday.

Read more »

A woman leans forward with her hand behind her ear, as if trying to hear information.
Healthcare Shares

Buy $5,000 of Cochlear shares today and it could be worth this much in 12 months

Find out what brokers tip for this ASX healthcare stock next.

Read more »

Research, collaboration and doctors working digital tablet, analysis and discussion of innovation cancer treatment. Healthcare, teamwork and planning by experts sharing idea and strategy for surgery.
Earnings Results

Healius posts FY26 revenue growth, narrows underlying loss

Its underlying loss narrowed, but its reported loss after tax widened to $415.6 million.

Read more »

patient with doctor, medical company, medical insurance
Healthcare Shares

CSL shares just had their best day in 20 years. What did I just miss?

A US$2.6 billion loss sent CSL shares soaring. Here is why.

Read more »

Five healthcare workers standing together and smiling.
Healthcare Shares

EBOS FY26 earnings: profit edges higher, dividend steady

EBOS Group posts a rise in FY26 profit and revenue as it maintains its final dividend for shareholders.

Read more »

Medical workers examine an x-ray or scan in a hospital laboratory.
Healthcare Shares

Bell Potter tips more than 140% upside for this out of favour ASX biotech

This company has made good progress over the past quarter.

Read more »

Doctor sees virtual images of the patient's x-rays on a blue background.
Healthcare Shares

Why are Pro Medicus shares surging more than 10%?

The shares are still short of one broker's price target.

Read more »