After what felt like an endless slide, CSL Ltd (ASX: CSL) shares are finally giving investors something to smile about.
The biotech giant has surged almost 85% from its multi-year low of $90 in June. But the rebound hit a speed bump last week, with the CSL share price falling 5% to $167.10. Even so, it remains 21% higher over the past month, although it's still down 21% over 12 months.
So, after such a dramatic turnaround, where could CSL shares head next?

Image source: Getty Images
Why have CSL shares rallied?
To understand the recovery, it helps to remember just how beaten down CSL shares had become.
At $90, its shares were trading at levels not seen in more than a decade. Even during the COVID-19 market crash, investors didn't push CSL anywhere near that low.
The market appeared to be pricing in a very bleak future. Then came CSL's FY26 result and a reset that investors seemed willing to embrace.
On the surface, the numbers looked disastrous. CSL reported a US$2.6 billion net loss, dragged down by US$7.1 billion of pre-tax impairments and US$799 million in restructuring costs. Much of this was non-cash, with significant impairments tied to CSL Vifor's intangibles and under-utilised assets.
But investors looked beyond the headline loss.
Underlying NPATA fell just 2% to US$3.1 billion, while revenue slipped 1% to US$15.8 billion, beating expectations.
More importantly, the result gave the market a cleaner starting point and a clearer path forward.
Why FY27 could make or break the recovery
The bull case now rests heavily on FY27. CSL expects underlying NPAT to grow about 5%, ahead of consensus expectations for roughly 2% growth.
Behring is expected to deliver mid-single-digit growth, with immunoglobulin sales forecast to rise at a mid-to-high single-digit rate.
Vifor remains the major headache, however, with revenue expected to plunge around 25% as iron generics enter the market. Vifor itself was the source of most of the impairments, and it is now shrinking by a quarter a year.
The bulls argue Behring is large enough to absorb that. Consensus forecasts put earnings per CSL share at approximately $9.00 in FY27, $9.50 in FY28 and $10.10 in FY29.
At $167.10, CSL trades at roughly 19 times forecast FY27 earnings. That's hardly bargain territory, but it could look reasonable if the earnings recovery plays out.
Are CSL shares heading higher?
Several major brokers remain bullish on CSL shares despite the recent rally.
UBS has a buy rating and $181 price target, implying around 8% upside. Morgan Stanley is overweight with a $182 target, while Morgans has a buy rating and $187.71 target, representing roughly 12% potential upside.
So, while CSL shares have bounced sharply, the broker view suggests there may still be some upside, provided the anticipated earnings recovery materialises.
However, the team at Macquarie is considerably more cautious, with a neutral rating and target of just over $133.
For investors, the key question may no longer be whether CSL can recover, but whether its improving outlook can justify the much higher share price.