CSL Ltd (ASX: CSL) shares have made an extraordinary recovery over the past few months.
After falling to a low of just $90 in June, the biotechnology giant has staged an impressive comeback.
Its shares reached a new 52-week high of $199 earlier this week and are trading around $197.50 on Friday.
That is quite a turnaround for a company that was only recently struggling to win over investors.
But after such a strong rally, is there still an opportunity for investors?
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What's behind the recovery?
CSL's turnaround has been supported by improving confidence in the company's outlook.
After a challenging FY26, management has outlined plans to restore earnings growth through improved efficiency, stronger commercial performance, and continued investment in its core businesses.
Its latest guidance, announced alongside its FY26 results, points to approximately 5% underlying net profit growth in FY27 on a constant-currency basis, with demand for its immunoglobulin therapies remaining healthy.
The announcement this month of the appointment of Deborah Waterhouse as its next CEO has also brought fresh optimism about the company's direction.
However, CSL's recovery is also taking place against a much stronger backdrop for biotechnology shares globally.
According to CNBC, the iShares Biotechnology ETF (NASDAQ: IBB) had gained 24% in 2026 as of 23 October.
This reflects renewed enthusiasm for drug development, increased merger and acquisition activity, and advances in technologies such as artificial intelligence (AI) and genetic medicine.
Some commentators are even talking about a potential golden age for biotechnology, as new technologies open up opportunities to develop treatments for previously difficult-to-treat diseases.
CSL is therefore benefiting from a broader improvement in sentiment towards the sector, alongside growing confidence in its own recovery.
What about CSL shares' valuation?
The considerable recovery in CSL's share price means investors are now paying a higher price for its future earnings.
According to current CommSec consensus forecasts, CSL is expected to generate earnings per share (EPS) of $9.06 in FY27, $9.60 in FY28, and $10.14 in FY29.
At the current share price of around $197.50, this puts the company on a forward price-to-earnings (PE) ratio of approximately 21.8 times for FY27.
That falls to 20.6 times for FY28 and then 19.5 times for FY29.
Those multiples are certainly less attractive than they were when CSL shares were trading closer to $100.
Nevertheless, I still think the valuation is reasonable for a business with CSL's long-term prospects.
The company remains a global leader in plasma-derived therapies, with demand for immunoglobulin expected to grow as diagnosis and treatment rates improve.
CSL also has opportunities to improve manufacturing efficiency and plasma yields, which could support profitability as production increases.
Meanwhile, newer therapies such as ANDEMBRY and HEMGENIX provide additional growth opportunities.
If management can successfully execute its recovery strategy, I believe CSL could deliver stronger earnings growth over the longer term.
Of course, there are still challenges. Its Vifor business continues to face generic competition, while the company needs to demonstrate that its operational improvements can deliver sustainable results.
And after such a strong share price recovery, disappointing earnings could quickly dampen investor enthusiasm.
Foolish takeaway
For me, CSL shares remain a buy at around $197.50.
I certainly wouldn't describe them as the bargain they were earlier this year, but I still see plenty to like about its long-term prospects.
The recovery will depend on management delivering the improvements it has promised, and there may be setbacks along the way.
However, with its established market position, growing demand for its therapies, and opportunities to improve profitability, I believe CSL can continue rewarding patient investors.
