CSL Ltd (ASX: CSL) shares slipped 2% to $171.21 on Wednesday, but that hardly dents their remarkable recovery. The ASX biotech stock has surged 30% over the past month and is now up about 90% from its 11-year low of $90 in June.
By comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 4% in the past month.
After such a dramatic rebound, investors are asking a simple question: how much further can CSL shares go?
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Why have CSL shares soared?
The catalyst was CSL's FY26 result. On the surface, it looked ugly, with the $80 billion biotech reporting a US$2.6 billion net loss after tax.
Investors, however, quickly looked beyond the headline figure. The loss included US$7.1 billion of pre-tax impairments and US$799 million in restructuring costs, much of which was non-cash. Most impairments related to CSL Vifor intangibles and under-utilised property, plant and equipment.
Investors had already received a warning in May, when CSL flagged around US$5 billion of impairments and cut its FY26 guidance.
Excluding exceptional items, underlying NPATA fell just 2% to US$3.1 billion. Revenue declined 1% to US$15.8 billion, but still beat analyst expectations.
The result effectively gave investors what they wanted: a reset year, a cleaner balance sheet and an outlook that wasn't as bad as feared.
Could FY27 send CSL shares higher?
The bull case now centres on FY27.
CSL expects underlying NPAT to grow approximately 5%, ahead of consensus expectations of around 2% growth. Behring is expected to deliver mid-single-digit growth, with immunoglobulins forecast to increase at a mid-to-high single-digit rate.
The biggest challenge remains Vifor, where revenue is expected to plunge about 25% as iron generics enter the market.
Consensus estimates suggest CSL could generate earnings per share of roughly $9.00 in FY27, rising to $9.50 in FY28 and $10.10 in FY29.
At $171.21, CSL shares are valued at around 19 times forecast FY27 earnings. That's not cheap, but it arguably looks reasonable for a global healthcare leader returning to earnings growth.
By FY29, the valuation falls to roughly 17 times forecast earnings if those estimates are achieved.
What do brokers think?
Brokers aren't uniformly convinced the recovery has further to run. Of 19 analysts tracked by TradingView, 10 rate CSL shares a hold, while nine have a buy or strong-buy rating.
The average 12-month price target is $173.04, barely above the current share price.
There's a huge spread between individual forecasts. The most bullish target is $206.76, implying another 21% upside. The lowest sits at $131.49, suggesting roughly 23% downside.
Macquarie is among the most cautious, with a neutral rating and target of just over $133. UBS is more optimistic at $181, while Morgan Stanley has a $172 target.
Foolish takeaway
CSL has staged an extraordinary recovery, but the easy gains may already have been made.
The business is emerging from a difficult period with a cleaner balance sheet and expectations for improving earnings. However, the broker targets suggest the market remains divided over how quickly that recovery will translate into shareholder returns.
At around 19 times FY27 earnings, CSL shares aren't screamingly cheap. Investors buying today are effectively betting that the company's earnings recovery will beat expectations.
If it does, there's potentially more upside. If growth disappoints, the recent 90% rebound leaves plenty of room for the shares to fall.
