CSL Ltd (ASX: CSL) shares are falling again today.
As you may be aware, shares in the S&P/ASX 200 Index (ASX: XJO) biotech stock closed down a precipitous 16.9% yesterday, trading for $225.50 each.
In morning trade on Wednesday, shares are changing hands for $215.62 apiece, down 4.4%.
The brutal two sell-off follows the release of CSL's full-year FY 2025 results on Tuesday morning.
While many of the core financial metrics beat consensus expectations, investors rushed for the exits, sending CSL shares plunging. A move that the analysts at Macquarie Group Ltd (ASX: MQG) believe could prove to be costly.
Here's what's happening.
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CSL shares hammered on earnings and divestment jitters
As a quick overview, CSL operates three distinct business divisions.
The company's Seqirus segment is one of the world's largest influenza vaccine businesses. CSL's Behring segment focuses on treating rare and serious diseases, and its Vifor segment, acquired in 2022, provides renal disease treatment.
Now, CSL shares were crushed on Tuesday despite the biotech giant reporting a 5% year-over-year increase in revenue to US$15.6 billion.
Macquarie noted that its Behring division was a miss with revenue 2% lower than the broker's estimates. However, both its Seqirus and Vifor divisions were above Macquarie's expectations on revenue.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 11% year over year to US$5.3 billion, with EBIT falling 2% short of Macquarie's estimates.
And underlying net profit after tax and amortisation (NPATA) was up 14% in FY 2025 to US$3.3 billion. That beat Macquarie's expectations by 2%, which the broker said was driven by lower-than-expected interest and taxes.
Looking to what could impact CSL shares in the year ahead, Macquarie said, "CSL continue to expect double-digit earnings growth in the medium term, albeit driven by cost-out strategy and reinvestment into revenue growth initiatives."
The broker added:
Our revised forecasts imply revenue growth of +4.2% and NPATA of US$3,488 million, this is below the mid-point of guidance [US$3,500 million] given recent earnings disappointments.
The elephant in the room
Investors also were caught off guard, and may have sold off CSL shares, by the major initiatives the company announced yesterday.
That includes a 15% reduction in its employee base, and other initiatives intended to drive annualised cost savings of $500 million to $550 million progressively over the next three years.
But the biggest bombshell was the company's plan to demerge its Seqirus division into a separate and "substantial ASX-listed entity" before the end of FY 2026.
Commenting on the demerger, Brian McNamee, chair of CSL, said:
This demerger of CSL Seqirus to our shareholders will create an ASX-listed, global influenza vaccine leader. The company has a great future that will be driven by its strong competitive position in an improving market.
While that may have led to extra pressure on CSL shares, with that pressure continuing today, Macquarie has a more optimistic take on the demerger.
According to the broker, "CSL note low cost synergies between Seqirus and Behring, with a demerger enabling faster cost-out, capital allocation autonomy and better capitalisation of opportunity."
Connecting the dots, Macquarie concluded:
Despite downgrades to earnings, we view [Tuesday's] price movement as an overreaction. Incorporating more conservative FY26 forecasts compared to guidance, we see the current valuation as undemanding (trading at P/E ~20x with ~10% EPS growth).
Macquarie maintained its outperform rating on CSL shares, while dropping its 12-month price target from $347.50 to $295.90.
That represents a potential upside of more than 37% from current levels.
