After two years of underperformance, the global biotech giant is showing signs of a meaningful recovery.
Cast your mind back to the height of the pandemic and CSL Ltd (ASX: CSL) looked untouchable.
The global plasma and vaccine giant had delivered extraordinary returns for decades and commanded a premium valuation that reflected its status as one of Australia's highest quality businesses.
What followed has been tough for CSL investors.
Plasma collection disruptions, a costly acquisition, and rising costs weighed on earnings and sentiment alike.
But for patient investors, the story today looks considerably more interesting.
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What went wrong and why it is now reversing
The core issue for CSL through 2023 and 2024 was the hangover from the pandemic.
Plasma collection centres struggled to rebuild donor volumes after COVID-19 disruptions, and the cost of collecting each litre of plasma rose sharply.
At the same time, the $16.4 billion acquisition of Vifor Pharma added significant debt and integration complexity.
Today, both of those headwinds are easing.
Plasma collection volumes have recovered materially, and CSL's RIKA automated plasma collection technology is now reducing the cost per litre collected, restoring the unit economics that underpin CSL Behring's profitability.
Vifor's iron deficiency and nephrology products are integrating well and contributing meaningfully to group earnings.
Some indicators are improving
For the first half of FY2026, CSL reported net profit after tax of US$1.93 billion, up 16% on the prior corresponding period, with the CSL Behring division posting revenue growth of 13%.
SEQIRUS, the company's influenza vaccine business, continues to perform strongly as demand for high-dose influenza vaccines grows among older populations.
Free cash flow is recovering, and CSL recently increased its interim dividend, signalling management confidence in the earnings trajectory.
The long-term case remains strong
CSL operates in markets with high barriers to entry.
Plasma-derived therapies require decades of manufacturing expertise, a vast donor network, and regulatory approvals.
The global demand for immunoglobulins, albumin, and clotting factors continues to grow as populations age and access to specialist care expands in emerging markets.
Analysts' average price target on CSL shares is well above current trading levels.
With a lower earnings multiple than it has historically attracted, the entry point today for CSL shares looks more attractive than it has in recent years.
Foolish Takeaway
Despite having a rough time of late, CSL shares are well poised to deliver in the future.
CSL exhibits many quality indicators, such as consistent earnings growth, a widening competitive moat, and a management team with a long track record of disciplined capital allocation.
For Fools with a multi-year time horizon, CSL looks like one of the most attractive large-cap opportunities on the ASX today.
