CSL Ltd (ASX: CSL) shares climbed 1.33% on Wednesday, to end the day at $142.18 a piece. Over the past five days the Australian biotech stock has climbed nearly 1% higher.
The past few days might look like a step in the right direction, but the reality is that it doesn't even make a pinprick in terms of recovering the huge losses made over the past couple of years.
CSL shares spiked at a 18-month high back in July 2024, and since then it's been a consistent string of declines. The share price is now 41% lower than 12 months ago, and down 17% for the year-to-date.
The most interesting thing is that analysts have widely considered the biotech company's shares oversold and undervalued for some time now.
TradingView data shows that 12 out of 18 analysts have a buy or strong buy rating on the shares, with a maximum upside of $268.67. That implies a 89% upside as of the close of the ASX on Wednesday afternoon.
The headwinds the company has faced over the past 18 months look to be easing, there is significant and recurring global demand for its biotherapy products, and limited competition in the space.
The company is also growing, with some periods of double‑digit profit growth, and forecasts which underpin a recovery over the long term.
So why is it that CSL shares are struggling to regain the momentum?
It looks like the problem could mostly be two-fold.
Image source: Getty Images
1. Investors lost confidence
A key reason behind why CSL shares are struggling to come back, is that there has been a major shift in investor sentiment.
CSL was once widely viewed as one of the most dependable growth companies on the ASX. But over the past few years it has experienced a notable slowdown in earnings growth and a sharp share price reduction. There have also been operational challenges and other headwinds such as lower vaccine demand, a surprise restructure, and even shock CEO exit.
In short, the company lost its reputation as a reliable ASX stock. Investors are no longer willing to pay a premium without a strong pipeline of expansion or concrete proof that share price growth can return.
2. There has been a market rotation
At the same time as the company-specific headwinds, there has been a broad market rotation away from healthcare related stocks so far in 2026.
ASX healthcare shares have lagged behind most other sectors on the index so far in 2026 as investors reposition themselves towards ASX energy stocks, resources, and defensive assets.
This rotation has put further pressure on CSL shares, and has prevented a meaningful recovery in the company's valuation.
What will it take for CSL shares to finally bounce back?
Ultimately, CSL might not gain positive traction from investors until it can prove that it has reignited short-term revenue and profit growth and overcome hurdles faced over the past 18 months.
Once investor sentiment shifts it could spark a sharp uptick in interest in its shares.
And of course, a market-wide rotation back towards healthcare stocks would also help.
