Why did the CSL share price lag the ASX 200 in the first quarter of 2023?

Shares in the ASX 200 biotechnology company edged into the green for the quarter but underperformed the benchmark index.

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Key points

  • The CSL share price underperformed the ASX 200 in the first quarter
  • The biotech stock may have come under pressure after a rival company received approval from the US FDA for a competing drug to treat anaemia
  • CSL traded ex-dividend on 9 March, sending the share price 2.2% lower on the day

The CSL Ltd (ASX: CSL) share price lagged the S&P/ASX 200 Index in the first quarter of 2023.

Shares in the ASX 200 biotechnology company closed out 2022 trading for $287.76. When the closing bell rang on 31 March, those same shares were trading for $288.30, up 0.2%.

While that put the CSL share price in positive territory for Q1 2023, it underperformed the benchmark index, which gained 2% over the three months.

Here's how the quarter unfolded.

What happened over the first quarter?

If you have a look at the price chart at the end of this article, you'll see that the CSL share price enjoyed a strong run in the early weeks of 2023.

On 3 February, shares closed at $313.81, notching fresh one-year highs.

Alongside the broader rising market at the time, the biotech giant looks to have benefited from some positive broker coverage.

Morgans was among those bullish brokers, adding CSL to its best ideas list for February. Morgans has a price target for CSL shares of $312.20.

Morgan Stanley also was positive on the company's stock, reaffirming its overweight rating with a $354 price target.

From 3 February through to 31 March, the CSL share price went the other direction though, falling 8.1% over that period.

One headwind could be that investors were pricing in news released on 3 February that GSK plc (NYSE: GSK), a rival biotech stock, had received approval from the United States Food and Drug Administration for a competing drug to treat anaemia caused by chronic kidney disease.

CSL also reported its half-year results on 14 February.

The biotech company reported a 19% year-on-year increase in total revenue for the six months to US$7.2 billion.

But profits were hit by currency headwinds and increased acquisition costs. This saw net profit after tax (NPAT) decline 8% year on year to US$1.6 billion.

The CSL share price also slipped 2.2% on 9 March. That's the day it traded without rights to the interim dividend of $1.62, unfranked.

CSL share price snapshot

As you can see in the chart below, the CSL has enjoyed a strong start to April, with shares up 5% so far this month.

Motley Fool contributor Bernd Struben 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. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended GSK. 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.

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