CSL Ltd (ASX: CSL) shares have slipped 9.77% over the past month, leaving some investors questioning whether the global biotech heavyweight is facing new headwinds.
This comes as international stock markets roar to new heights following the outcome of the recent US election.
Despite this, CSL shares have been heavily sold. At the time of writing, they are trading near three-month lows at $272.30 apiece.
With the company reaffirming robust FY25 guidance, is now a golden buying opportunity or a warning sign for ASX investors? Let's see.
What's behind the dip in CSL shares?
The slide in CSL shares coincides with a selloff in the broader healthcare sector, likely fuelled by geopolitical and regulatory concerns.
Today, healthcare stocks as a basket are down more than 1%, joined by the IT and financial sectors, which are also in the red.
Meanwhile, reports have surfaced surrounding US president-elect Donald Trump's choice to head the US Department of Health and Human Services: Robert F Kennedy Jr (or RFK as he is known).
Reporting from The Guardian says that global pharmaceuticals stocks sold off last week after the news was announced.
"The potential ramifications of RFK Jr running the department prompted panic among investors with shares [in pharmaceutical stocks]," it said.
Wait, what? Hold up a moment…
Let's take a step back here for a second and nut out how this relates to CSL shares.
A fundamental principle in statistics is that correlation does not (emphasis added) equal causation.
For instance, there could be an increasing trend for the number of sunny days in a year and the number of cats falling off rooftops.
Does that mean sunny days cause cats to fall off roofs? Or, that cats falling off rooftops causes the sun to shine? No.
The appointment of an elected official does not change a business's fundamental outlook, at least not overnight.
The same is true for CSL shares.
Brokers are bullish
That's why, while these factors may have spooked investors in the very short term, analysts remain bullish on the outlook for CSL shares.
At the company's annual general meeting in October, management reaffirmed FY25 guidance, projecting net profit between US$3.2 billion and US$3.3 billion.
This equates to growth of 10% to 13% — a sign that the biotech continues to deliver strong fundamentals despite market turbulence, supporting growth in CSL shares.
CSL's guidance has been met with widespread confidence from brokers.
Ord Minnett rates CSL shares as a buy, citing its margin recovery phase and consistent earnings growth. Analyst Tony Paterno noted that fluctuating exchange rates might shave off around US$50 million from FY25 figures, but this impact was expected to be minimal.
Bell Potter also sees potential upside, noting that CSL currently trades at a discount to its 10-year average forward price-to-earnings (P/E) ratio of 311 times.
Meanwhile, Citi has set a bullish price target of $345 for CSL shares, implying plenty of upside from current levels.
Finally, Morgans has also thrown its weight behind CSL shares, forecasting annual double-digit earnings growth over the mid-term.
Should you buy CSL shares now?
While the recent dip in CSL shares might unsettle some investors, the company's fundamentals remain strong.
On that point, it's essential to keep a long-term view in mind. Markets will overreact to the upside and downside, providing opportunities.
More important are the factors of business valuation, performance and the broader economy – not the headlines.
In the last 12 months, the stock is up 5.3%.
