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Why CSL Has Significantly Underperformed The Market

Sam Waldron

Sam is an Equity Analyst with ASR Wealth Advisers. He holds a Bachelor of Commerce at the University of Sydney, majoring in Finance and Economics. Sam currently holds RG 146 qualifications.

Whilst the ASX200 has shot up since pandemic lows in March 2020, those holding CSL would be quite disappointed to see CSL significantly underperforming the market. From this time last year, CSL is down 19%, whilst the ASX 200 is up 27%. In fact, at a current market price of $264.44, CSL is down 20.5% from its 52 week high of $332.68.



Source: Spectrum News

With the pandemic, some might have thought that CSL was well placed, being the second largest viral vaccine business in the world. However, the price pressures that they have been facing is due to the fact that CSL’s largest income-generating business line of plasma collection has been significantly restricted due to the pandemic, as donors are prevented through restrictions and lockdowns, and are nonetheless less interested in visiting plasma collection centres particularly as Covid stimulus payments has also disincentivised many traditional donors from donating.


These headwinds have been partially offset by CSL’s Sequiris influenza vaccine business, as most government’s around the world have been emphasising the importance of flu shots so as not to catch to flu and deplete the immune system making individuals more vulnerable to more adverse experiences with Covid-19.


This however makes CSL a company to keep on investor’s watchlists, as at these prices represents a more favourable valuation to potentially buy in and hold onto as plasma collection numbers return to normal in the medium to long term, especially as countries such as the US are well on their way with vaccination rollouts, with close to 190 million doses administered. Dr Anthony Fauci envisages that America can return close to normalcy with 70-85% of the population receiving both doses, with a vaccination rate of over 3 million doses a day, they are well on their way. It is important to consider that these headwinds are pandemic induced and not structural, so a longer term view on this company will be beneficial.


Another factor is competition fears in which Argenx SE is undergoing trials for FcRn for CIDP, which if successful and approved will intrude on some of CSL’s market share in immunoglobulin sales. However, brokers such as Credit Suisse aren’t concerned, as this threat is years off, and even so, it is believed that demand is strong enough to accommodate for both, as the pie grows for both even as it is split. Investors need to consider if this threat has been overreacted to, potentially further making CSL a stock to watch.



This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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ASR has no position in any of the stocks mentioned.

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