CSL Ltd (ASX: CSL) shares have become a hot topic this week among investors, analysts and market commentators alike.
The company's share price suffered what fellow Fool author James Mickleboro called a 'brutal selloff' on Tuesday.
Investors, spooked by CSL's FY25 results, a surprise restructuring, job cuts, and strategic demerger, sold off the stock and sent the share price crashing nearly 17% by the end of the day. It was the biggest single-day fall in its history.
On Wednesday, the share price shed another 2.11% before correcting and closing 2.4% higher on Thursday. At the time of writing on Friday morning, the share price has climbed another 0.45%.
It's a step in the right direction, but the share price still has a long way to go before it recovers to its pre-announcement level.
The news and share price drop sent analysts scrambling to re-evaluate CSL's valuation, and CSL quickly became a focus of attention among market players.
The thing is, while the news did come as a surprise, many analysts think that the investor reaction was overdramatic.
Before deep diving into the latest market sentiment, here's a quick recap of CSL's announcement earlier this week.
Image source: Getty Images
Here's what spooked investors
The company reported a 5% revenue increase to US$15.6 billion and a 17% lift in net profit after tax (NPAT) for FY25. Earnings before interest, tax, depreciation and amortisation (EBITDA) grew 11% to US$5.3 billion, and the final dividend was US$1.62 per share, up 12%.
CSL also announced major strategic initiatives to drive future growth and efficiency, including plans to demerge CSL Seqirus as a separate ASX-listed entity in FY26. The move will involve cutting up to 3,000 jobs.
The company said it plans to restart a multi-year on-market share buyback from FY26, beginning with an initial A$750 million in the first year.
Analysts are still positive on the stock
Overall, analysts appear to agree that the sharp drop in CSL's share price reflects short-term investor anxiety driven by concerns around execution risks and immediate strategic uncertainty.
According to TradingView data, the majority of analysts still hold a strong buy rating on the stock. The maximum target price for CSL shares over the next 12 months is $328.28 per share. That represents an upside of around 45% at the time of writing.
Yesterday, Morgans said it was still positive on the ASX 200 biotech stock and thinks investors should buy the dip. The broker has a buy rating and a $293.83 price target on the shares.
"While investors have taken a glass half full approach, we believe the restructuring augments, not masks the underlying business, with streamlining operations and cost savings supporting double-digit earnings growth over the medium term. We adjust FY26-27 forecasts modestly, with our PT decreasing to A$293.83. BUY," it said.
While E&P said it was disappointed with CSL's earnings result, the broker also said it considers the shares a buy with a $294.21 price target.
Elsewhere, broker Macquarie said that while investors may have been caught 'off-guard" by the announcement, it maintains its outperform rating and has a $295.90 target price on the shares.
"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)," the broker said in a note to investors.
What should investors do now?
While the selloff might seem like an overreaction, especially given CSL's robust financial results, the response is understandable given the scale of the announced restructure.
Rather than uncertainty about CSL's long-term viability, investors are likely pricing in short-term execution uncertainty and cost risks.
My tip? Keep calm, think about CSL's long-term potential and ask the question: does the sell-off present a good buying opportunity today?
