This $63bn global biopharma leader operating across three core divisions: CSL Behring, its dominant plasma therapies business generating the majority of earnings; CSL Seqirus, a major global influenza vaccine provider; and CSL Vifor, focused on iron deficiency and kidney disease following its 2022 acquisition. Operating in 100+ countries, CSL aims to combine biotech innovation with large-scale healthcare infrastructure to deliver complex, life-saving therapies worldwide.
Less than two years ago, this was a market darling, largely regarded as a must-own in any balanced portfolio. We got heavily criticised when we first sold the stock above $300, but in hindsight, these comments should have been reserved for our failed attempt at buying value into the ensuing sell-off – we’re glad we cut our losses on this occasion.
CSL’s de-rating hasn’t been driven by one issue — it’s the result of several pressures hitting at once:
Vifor Acquisition — debt + execution risk: The $11.7bn Vifor deal in 2022 was meant to diversify CSL, but it added significant debt just as rates surged. Growth has also underwhelmed expectations, leaving the market questioning both the price paid and the strategic rationale.
Plasma Margins — slow recovery: COVID disrupted plasma collection, forcing CSL to lift donor incentives to rebuild supply. While volumes have recovered, margins remain under pressure, and the expected rebound has been slower than hoped.
Seqirus — vaccine weakness: The biggest recent hit came from the vaccines division. CSL downgraded growth guidance, citing weaker US flu vaccination rates, while also delaying the planned Seqirus spin-off. This drove a sharp sell-off and dented confidence in the growth outlook.
CSL has more than halved from its peak and is trading around multi-year lows, despite a share buyback program. However, this is a far more complex story than its peers. CSL is dealing with real operational headwinds across multiple divisions, and when you’re this big it’s not easy to turn the ship around quickly.
- We put CSL in the too-hard basket earlier in the year, and although it’s flashed “cheap” at times, we see no reason to add this market behemoth to our Hitlist.
MM is neutral towards CSL around $130
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