The CSL Ltd (ASX: CSL) share price has been under heavy selling pressure again this week.
So much so, the biotechnology giant's shares are trading near a decade-low.
Is this a buying opportunity? Let's see what the team at Bell Potter is saying about the former market darling.
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What is the broker saying?
In a broker note titled "Blood on the Street", Bell Potter highlights that CSL has made a sizeable downgrade to its earnings guidance.
While this was disappointing, Bell Potter was particularly concerned with its CSL Behring gross margin weakness. This has caused doubts that CSL will be able to bring its margin back to pre-COVID levels in the future. It said:
CSL provided a hefty downgrade to FY26 guidance, lowering revenue by ~$750m (i.e. -4.7%) and NPATA by ~$300m (i.e. -8.7%) from the prior midpoint of guidance ranges. Updated guidance now implies a 2% decline in revenue and 4% decline in NPATA vs FY25. We were already below prior guidance ranges however the update today was worse than expected. The majority of CSL's products are facing a mix of underlying market softness (e.g. Seqirus, albumin) or increased competitive pressures (e.g. Ig and iron) as evidenced by today's update.
One of the most concerning takeaways was the further degradation in Behring GM for FY26, leading to further loss of confidence it can climb back to the pre-Covid level of ~57%. Additionally, the US Ig plasma market has undoubtedly faced oversupply recently, leading to price competition and further market share loss for CSL. The approval by EU regulators of Grifols' Egyptian based plasma supply chain will only add further supply capacity in the coming years to the global market.
Is the CSL share price good value?
According to the note, the broker has retained its hold rating with a heavily reduced price target of $100.00 (from $155.00).
This is only modestly higher than the current CSL share price of $99.25.
Commenting on its recommendation, Bell Potter said:
Earnings decreases drive large reductions to our PE and DCF-based valuations. We increase the PE valuation weighting to 75% and reduced the multiple to 12.0x. This leads to a reduction of our PT to $100 (from $155). We maintain our Hold recommendation. CSL's global biopharma peers trade on a median of 14x FY27 PE.
We think a discount is warranted for CSL considering the declining underlying earnings outlook across FY26-27, the lack of stable management, and series of credibility hits following several disappointing results/trading updates. CSL is trading on ~12x our forecast NPATA for FY27. The difference between NPATA to statutory NPAT remains uncertain given the $5b of additional impairments announced today with unclear spread across FY26-27.
