The CSL Ltd (ASX: CSL) share price decline of 35% this year (at the time of writing) is one of the biggest among ASX blue-chip shares in 2025.
While the company has decades of delivering growth under its belt, the market now seems more cautious about its growth prospects in the near future.
The US healthcare industry looks challenging under the relatively new US administration, with a shift in focus on vaccines and other healthcare areas. As a major player in the vaccine space, this seems like a headwind for CSL's medium-term growth. Other areas of CSL's business may also not grow as fast as previously hoped.
But the significant decline of the CSL share price may mean the business is undervalued. Let's take a look at the potential for capital gains.
CSL share price potential
Earlier this month, CSL held an investor day, with UBS seeing some mixed numbers.
Seqirus (CSL's vaccine business) is expected to see sales fall 15% in FY26, which "reflects another significant drop in US vaccination rates, partly offset by market share gains in 65+ years in Europe."
UBS believes there is scope for a meaningful US recovery over the medium term, with flu doses in FY26 around 30% below pre-COVID levels, compared to other large markets, which are stabilising at pre-COVID levels. But, that probably requires "greater doctor support coupled with political pressure from a higher disease burden", with CSL not assuming a recovery in the next couple of financial years.
The broker then said:
The largest long-term opportunity [is] through new aTIVc (combined cell based and adjuvant vaccine) which should receive European regulatory approval in 2026, while a reducing number of COVID vaccinations limits the upside of its future mRNA product. Valuation: $275/share (unchanged) in 12 months' time.
UBS is expecting a 100 basis point (1%) increase of CSL's net profit after tax (NPAT) margin across FY27 and FY28, which helps take the potential net profit growth to high single digits.
The broker also points out that CSL has a cost-saving target of US$550 million, which could assist earnings.
Areas such as operating efficiencies, targeted gross cost savings in research and development, commercial efficiencies, and overheads could help the business reduce its addressable manufacturing costs by 11% by FY28.
CSL thinks it's well-positioned to deal with US tariffs and 'most favoured nation' (MFN – cheaper healthcare costs for US customers) issues, thanks to the likely plasma exclusion and CSL's growing US investment.
UBS rating on the ASX healthcare share
The broker has a buy rating on the business, with a price target of $275. That implies a possible rise of 50% over the next year from where it is today.
UBS is projecting profit growth each year between FY26 and FY30. But the business may need to deliver on earnings expectations to justify a strong double-digit capital gain over the next 12 months.
