Morningstar analyst Shane Ponraj believes the recent sell-off of CSL shares was an overreaction. Despite plasma earnings falling short of expectations, Ponraj highlights positive signs, including a 5 per cent growth in immunoglobulin sales and a 120 basis point increase in gross margin in the second half of fiscal 2025. He anticipates continued improvement in these areas. CSL is a global biotechnology company that researches, develops, manufactures, and markets a range of plasma products. It also develops and manufactures a range of recombinant pharmaceutical products and vaccines.
Ponraj also noted acting chief executive Gordon Naylor’s support for the company’s ongoing transformation plan. The company remains on track to achieve its targeted cost savings of over US$500 million by fiscal 2028. This commitment to efficiency and strategic realignment is seen as a positive indicator for CSL’s future performance.
While Morningstar has lowered its fair value estimate for CSL by 8 per cent to $270 due to the weaker US dollar and a slower-than-anticipated recovery in plasma margins, Ponraj maintains that the current share price presents a buying opportunity. He argues that the market’s pessimism is excessive, implying a contraction in plasma gross margins that he considers unrealistic.
In conclusion, Morningstar’s analysis suggests that CSL’s underlying strengths and strategic initiatives outweigh the short-term challenges. The analyst’s assessment points to a potential undervaluation of CSL shares, driven by what he deems to be excessive market pessimism.
