Brokers

The CSL share price has at least 20% upside: top brokers

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The CSL Limited (ASX: CSL) share price has sensationally been dumped amid a broader market sell-off by investors.

Year to date, the global biotech’s shares have fallen by around 7.5%. By comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 2.7% in the same timeframe.

Looking at Friday’s market close, CSL shares edged 0.14% higher to $269 apiece.

What’s weighing down CSL shares?

A couple of factors have negatively impacted the CSL share price, compelling investors to hit the sell button.

First and foremost, the S&P/ASX 200 Health Care Index (ASX: XHJ) has been in reverse throughout 2022, down 11%.

Investors appear to have focused their efforts on other performing sectors such as the S&P/ASX 300 Metals & Mining (ASX: XMM) index. This consists of the top 300 ASX companies involved in gold, steel and precious metals.

For context, the Metals & Mining sector has soared 5.78% from this time last Monday and is up 11% in 2022.

And it is no surprise, given the war in Ukraine and inflationary movements, that commodity prices have skyrocketed.

Market psychology can be a powerful force when crowd behaviour chases market rallies or sell-offs during downturns.

Another factor that has led CSL shares to fall is the delay in completing the acquisition of Vifor Pharma.

Originally, the deal was due to be wrapped up this month. However, receiving regulatory approvals is taking a little longer.

CSL now expects to finalise the takeover next few months.

What do the brokers think?

Before COVID-19, CSL shares were known for their high-growth and defensive qualities. The company’s share price had a healthy track record of outperforming the benchmark index, which attracted investors.

In February 2020, CSL shares hit an all-time high of $342.75 before losing more than 20% within a month.

Fast forward to today, a number of brokers have weighed in on the CSL share price.

Earlier this year, the team at Morgans cut its 12-month price target by 2.1% to $327.60 for CSL shares. Based on the current share price, this implies an upside of about 21.7% for investors.

Despite slashing its outlook by 1.5%, analysts at Citi had a more bullish price on the company’s shares at $335.00. From where CSL trades as of Friday, this represents an uplift of 24.5% over the next 12 months.

Even though both brokers reduced their price targets, they believe that the CSL share price is attractive at current levels.

A recap on the CSL share price

No doubt it has been a frustrating time for CSL shareholders. Traditionally, its shares outperform the broader market. However, this has not been the case since the start of the year.

On valuation grounds, CSL is the third largest company on the ASX with a market capitalisation of roughly $129.58 billion.

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