It's been well documented this year has been tough for CSL Ltd (ASX: CSL) shares.
The ASX health care company has seen its share price shed almost 30% over the last 12 months.
Due to its blue-chip status, many investors have likely been hoping to scoop up this quality company at a discounted price.
However fresh analysis from Bell Potter suggests it's not all smooth sailing ahead.
The broker has reduced its 12 month price target.
Let's see what prompted the adjustment.
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Modest guidance a key concern
According to yesterday's report, a key concern arising from CSL's FY25 result was modest guidance of 4-5% FY26 revenue growth.
The broker has lowered its NPATA forecasts by -3% in FY27 and -6% in FY28.
Bell Potter sees CSL's new drug Andembry (garadacimab) as effective and more convenient for patients. However it's not expected to significantly boost overall company revenue in the near term.
Following a detailed review of key new product launch, Andembry (garadacimab), we conclude it offers a clear convenience benefit and strong efficacy profile, however is unlikely to materially revitalise group topline growth in the coming years.
The company's main business is facing headwinds. While cost savings exist, much of that money will be reinvested into R&D, leading to lower short-term profit forecasts.
CSL target price trimmed
CSL shares closed yesterday at $211.00 each.
Broker Bell Potter said its changes to forecasts lead to a ~3% reduction in DCF valuation (7.8% WACC, 1.75%TGR).
It also reduced the applied PE multiple from 22.0x to 21.0x NPATA (FY26e) due to ongoing uncertainty around the de-merger and cost-out initiatives.
Bell Potter has trimmed its 12 month target price from $240 to $230 and has maintained its "hold" recommendation.
We acknowledge CSL is trading at a PE of 19x NPATA, well below its historical average, however, we also highlight the downgrade cycle over the last 2 years has driven much of the poor share price performance.
Price target upside
Despite the reduced price target, it seems CSL shares are still trading below fair value.
Based on yesterday's closing price of $211.00 and Bell Potter's updated price target of $230, there is an estimated upside of 9%.
However, the broker did also note that threats of US pharma tariffs and pricing controls in recent months had dampened global pharmaceutical valuations.
Based on the guidance out of Bell Potter, it seems there is still reason for a long term recovery for CSL shares. However the short term may be volatile.
