CSL Limited (ASX: CSL) shares have taken a beating this week.
Since the end of last week, the biotherapeutics giant's shares have fallen almost 10%.
This has been driven by a trading update which revealed that operating conditions weren't as rosy as they seemed.
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Are CSL shares in the buy zone?
Analysts at Citi have been looking over CSL's update and have given their verdict.
Citi appears to have been a touch disappointed with the update and has revised its earnings estimates to reflect the margin pressures. However, despite this, the broker remains positive and sees a lot of value in CSL shares at the current level.
Its analysts have retained their buy rating with a trimmed price target of $340.00. Based on its current share price, this implies potential upside of almost 23% for investors over the next 12 months.
Citi commented:
The trading update was about resetting the market's expectations for the recovery of gross margins in the Behring division, as both donor fees and labour cost inflation remain higher than anticipated. CSL now expects Behring GM to recover to pre-covid levels in 3-5 years (FY26-28) – the market was expecting a sharper recovery by FY26. We now expect FY27.
CSL increased the FX headwind guidance for FY23 and provided FY24 NPATA guidance which was ~12% below VA consensus. We cut our above market FY23-25e NPATA per share (Core EPS) by -4%/-17%/-17% and cut our TP to $340 (from $350). Our TP implies CSL should trade on an FY26 PE of ~27x, in line with the 10-year average. Maintain Buy. The next catalyst is the release of the argenx trial data expected in July (argenx CIDP trial data expected in July).
