Australia | Oct 31 2025
This story features CSL LIMITED.
For more info SHARE ANALYSIS: CSL
The company is included in ASX20, ASX50, ASX100, ASX200, ASX300 and ALL-ORDS
Falling vaccination rates in the US prompted a guidance downgrade at CSL, but was the market’s reaction excessive?
- CSL downgrades guidance, Seqirus de-merger delayed
- Falling US flu vaccination rates the main culprit
- Behring momentum intact despite albumin hit
- Share buybacks resume beginning with an $750m on-market buyback in FY26
By Mark Woodruff
Signaling the need for swift transformation at this week’s AGM, CSL ((CSL)) Chairman Dr Brian McNamee conceded the global leader in plasma therapies, influenza vaccines, and iron treatments has grown overly complex, thereby limiting management’s agility to respond to geopolitical challenges and protect its market leadership.
To become nimbler, management targets over US$500m in savings by FY28 to reinvest in high-priority growth initiatives. Savings will be achieved by reducing fixed costs and improving efficiency in research and development, integrating the Behring and Vifor commercial and medical teams to boost productivity and eliminate duplication, while actively reviewing corporate overheads.
In following statements, Chief Executive Officer and Managing Director Dr Paul McKenzie noted the majority of the business continues to track to plan in FY26, noting Behring’s “strong fundamentals” in its core immunoglobulin franchise. Vifor is also “competing well” and “growing to plan” in the evolving iron and nephrology markets.
But there’s no denying declining US influenza vaccination rates are pressuring the Seqirus business via lost sales of manufactured vaccines, while China’s cost-containment measures are curbing albumin demand, weighing on the core Behring division.
It’s important to note the negativity is far greater around Seqirus, which represents 10-15% of CSL’s total sales, compared with around 70% for Behring. For the latter, management expects to contain the adverse effect on albumin to the first half of FY26 through unspecified mitigation measures.
No such containment appears possible for Seqirus, where ongoing vaccination uncertainty has resulted in a revision of the FY26 group revenue growth outlook to 2-3% from 4-5% while profit (NPATA) growth guidance is lowered to 4-7% from 7-10% at constant currency.
US insurance claim data indicate a -12% fall in influenza vaccine uptake across the general population and a -14% decline among those aged 65 and over versus the prior corresponding period.
This implies to the analysts at Morgans a double-digit drop in Seqirus’ FY26 revenue, compared with the previously expected high single-digit decline.
CSL also downgraded its commitment “to delivering double-digit earnings growth over the medium term”. In its place, management has now reduced net profit (NPATA) growth expectations for FY27 and FY28 to “high single digits” led by uncertainty regarding US vaccination rates.
For readers new to CSL, plasma is the starting raw material CSL collects through plasma donation. CSL Behring then separates and purifies various components from plasma to make therapies for immune deficiencies, bleeding disorders, and shock treatment. Albumin is one specific protein extracted and purified from plasma.
CSL, Grifols, Takeda, Octapharma, and Kedrion collectively account for nearly 80% of global market share in plasma fractionation and derived therapies.
In a further move to maximise shareholder value, CSL will delay the previously announced strategy to de-merge the Seqirus business in FY26 via a separate listing on the ASX, until US influenza vaccine market conditions improve.
CSL is the world’s largest plasma protein therapeutics provider and one of the top influenza vaccine manufacturers.
The company’s extensive plasma collection infrastructure and decades of manufacturing expertise create high barriers to entry for competitors in immunoglobulin and blood product markets.
Seqirus’ cutting-edge vaccine technologies (e.g. cell-based flu vaccines) also give it a strong competitive edge in the flu sector.
Lower guidance analysed
On the day of the AGM update a -16% fall in CSL’s share price appeared disproportionate to the analysts at Citi given the modest -3% downgrade to profit guidance at the mid-point.
The midpoint of FY26 profit guidance suggest a number around US$3.4bn for the financial year, explains Morgan Stanley. When combined with a currency tailwind of circa US$100m, around US$3.5bn is expected, a rise of 8.5% year-on-year, and in line with the consensus forecast prior to updated guidance.
Analysts at UBS believe reduced guidance likely reflects the combination of a less impactful product pipeline, challenging conditions in the US influenza vaccine market, and potential effects from US tariff and Most Favoured Nation (MFN) measures.
It’s felt a re-rating will depend on greater confidence in Behring’s profit growth outlook, as well as a clear strategy to mitigate the impact of US tariffs and MFN policies, likely through accelerated investment in US manufacturing.
Currently, this broker expects the Behring gross margin to reach 56% by FY36 (previously FY30) after incorporating MFN impacts.
RBC Capital also ponders whether additional factors may be influencing CSL’s medium-term earnings outlook.
Assuming Seqirus revenue remains flat in FY27 and FY28, this broker’s forecasts still show profit growth of 17% in FY27 and 7% in FY28.
As a result, RBC analysts question whether management’s guidance implies increased risk to the revenue growth trajectory or margin recovery within the Behring business.
Albumin from China
China is an important market for CSL (especially for albumin). With its broad portfolio, CSL serves patients in more than 100 countries. The company generates a substantial portion of revenue in North America and Europe, supported by large manufacturing sites and R&D hubs in the US, EU, and Australia.
Overall, CSL’s geographic reach and supply chain, including around 300 plasma collection centers primarily in the US, provide a robust foundation for its global operations.
This worldwide footprint enables CSL to meet demand for its therapies across diverse markets while leveraging economies of scale in plasma procurement and vaccine production.
Other broker views
Morgans believes the market is over-estimating the risk of a permanently lower earnings base, noting valuations for Seqirus and Vifor have been marked down, while Behring’s is now also below peers and well under its long-term average, a discount the broker views as unwarranted.
While seeing upside on a 12-month view, Buy-rated Citi thinks investors are not yet convinced this is a true clearing event and that CSL is now a “show-me” story.
CSL shares are trading at a discount to the ASX200, this broker notes, a valuation gap not seen in more than a decade.
CSL is trading on an underlying PE of around 17x for FY26 and 16x for FY27 based on Bell Potter’s latest forecasts, well below the company’s historical average, yet still above the international biopharma peer average of roughly 14x for 2026.
Ord Minnett is sticking to its Hold rating given concerns over revenue growth and the timing of margin recovery within the Behring business. Additional complexity is noted from the proposed Seqirus spin-off and the recent introduction of new US tariffs.
While equally disappointed by the lower guidance, analysts at Jarden adopt a wider view.
Positives highlighted include improvement in CSL’s earnings risk profile; a business that remains highly cash generative (with gearing around 1.8x); and upside potential via Horizon 2, which aims to optimise and improve yield of immunoglobulin products.
Further, Jarden points to CSL’s recommencement of share buybacks, beginning with an $750m on-market buyback in FY26.
Outlook
Morgans views Behring’s growth engine as intact, with cost efficiencies strengthening the pathway to sustained expansion.
Morgan Stanley remains positive on the medium- to long-term outlook for immunoglobulins and sees scope for yield initiatives, including Horizon 2, to underpin a recovery in CSL Behring’s gross margins.
There are seven daily monitored brokers in the FNArena database that actively research CSL of which five are Buy-rated (or equivalent) and two are on Hold.
Noting that Macquarie is yet to refresh its research following the guidance downgrade, the average target in the database reacted to the news by falling to $243.96 from $272.43.
UBS and Macquarie remain the high-markers with price targets of $275 and $275.20 while Bell Potter’s $195 marks the other end of the range.
This new average target compares to yesterday’s closing share price of $179.56, suggesting around 36% upside.
Outside of daily coverage, Jarden (Overweight) has a new target of $287.14, down from $304.17. RBC Capital (Sector Perform) lowered its target to $189 from $280.
Bell Potter notes the agenda for the upcoming Capital Markets Day on November 25 is less clear after the Seqirus de-merger has been put on hold.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: CSL - CSL LIMITED
