The CSL Limited (ASX: CSL) share price is currently at $252.90, up 0.36% in early trading on Tuesday. The S&P/ASX 200 Index (ASX: XJO) is up 0.77% at the time of writing.
It's obvious that CSL shares are on sale right now. The ASX 200 healthcare blue-chip share recently retreated to a four-year low of $228.65.
Ellerston Capital portfolio manager, Chris Kourtis says the CSL share price has been "absolutely pulverised". As a result, he says a significant buy-the-dip opportunity is now in play for ASX 200 investors.
"Back in July, I said CSL was an expensive defensive," Kourtis said. "But now, for the first time in a long time, it's no longer an expensive defensive. It's screening really cheap."
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Why has the CSL share price retreated?
Morgan Stanley analyst Sean Laaman says the reasons behind CSL's recent underperformance are "now well understood".
He explains:
We think this is due to recovery to pre-pandemic plasma GM in FY26-FY28 has been slower than we anticipated, FcRn disruption in CIDP possible in FY25, and generic competition nears for V4's Injectafer in Europe.
On top of that, some investors feel concerned that the wonder drug Ozempic, which treats diabetes and obesity, may end up being an effective treatment for chronic kidney disease (CKD), too.
That could mean new competition for CSL's Vifor business that develops and sells drugs for CKD. CSL only just acquired Vifor in 2022 for $18 billion.
What are the experts saying?
In relation to the CSL share price, Charlie Aitken from Bell Potter says "the falling knife is sticking in the valuation floor and it's time to pick it up".
He highlights that CSL is trading on its lowest price-to-earnings (P/E) ratio in six years, commenting:
McNamee's comments, combined with the reiteration of guidance last week, and arguably peak hysteria on weight loss drugs and some questioning articles in the financial press about CSL's future, all combine with the lowest relative valuation in 6 years to get my attention.
What are the 12-month share price targets?
UBS has a buy rating on CSL and a 12-month share price target of $340.
Morgan Stanley has an overweight rating on the healthcare stock and a $334 price target.
Morgans has an add rating and a $328.20 share price target. The broker recently commented:
Management expressed confidence in CSL's resilience (ie no material impact from GLP-1s) and competitive advantages in scaled operations, reiterating FY24 guidance and calling for annual double-digit earnings growth over the medium-term.
This growth is underpinned via a leading position in large, growing markets, and focus on improving plasma yields, lowering costs, a disciplined approach to digitalisation, and new drug launches to improve Behring GMs (3-5 years to pre-COVID levels), with ROIC improving over time.
Citi has reiterated its buy rating and has a $325 price target on CSL stock.
Macquarie has an outperform rating on CSL with a share price target of $321.
All of these targets imply a minimum potential upside of 27% for ASX 200 investors who buy CSL at today's price. If the bullish target from UBS is right, there's a maximum potential upside of 34%.
