Previous market favourite CSL has endured a torrid year, plunging ~70% at its worst. The company has delivered four downgrades in less than a year, turning sentiment towards the ASX healthcare giant on its head, dramatically reducing it’s index weight in the process. The latest update, last month here, showed the company is struggling on a number of fronts as it attempts to steady the proverbial ship. This company’s performance operationally has understandably led to significant valuation contraction, from a quality company priced for growth to one where revenue is fighting to tread water over the coming years. CSL now trades on just 12.5x Est earnings, having recently touched a PE of 10x – unheard of since it’s listing in 1996.
Even after bouncing ~17%, CSL is trading ~50% below its average valuation of the last 5 years, but considering the company’s evolution over recent times, this is not a number worth paying too much attention to. However, this remains a world-class business in the bigger picture, but its feeling mature with growth likely to be increasingly hard. We see little downside from current levels, although that’s not a reason to re-enter a stock we sold ~$145 earlier in the year.
- We can easily see CSL bouncing another 10-20%, but it’s unlikely to find its way onto our Hitlist in 2026.
MM is cautiously bullish towards CSL ~$115
Add To Hit List
