For what little it's worth - for the five brokers that I can see released updates today post the CSL announcements ...

RBC Capital Markets: Outperform with PT $364

Morgan Stanley: Overweight PT $339 (yesterday) then revised to $325 in a further update today

Macquarie: Outperform PT $344

BoFA:

Goldman Sachs: Neutral $295

DISC: Held in RL

GS is a downgrade from $314 to $295, a bit more than MS's.

Both seem about right to me. In my initial post this morning, I didn't correctly appreciate the FY24 margin impact. I read the headline being about currency, but the real issue is deeper. With so much cost denominated in USD and so much revenue in non-USD, and the impacts of inflation and sticky higher payments for plasma, it is a significant margin erosion impacting a year or two.

Market was right, I was wrong - directionally, But -7% might be a bit overdone.

Thought I'd take time to summarise the call transcript here is a few points

• Amortisation from Vifor acquisition probably tracking 50m more than forecast to around 140-160m (initially was forecasted to be $120m)
• HEMGENIX from Vifor being commercialised in the next couple of weeks with first patient to be dosed and will limit the growth in amortization. But sees increasing comp from generics such as Sandoz that got approval recently for one of their drugs.
• 50% of sales are now outside of US and growing into China and Japan. These saw the most impact from US FX movements followed by Euro, CHF and AUD.
• Donor fees and labour costs rising. Some competition for donors. But CPL (Cost per litre of Plasma) is going down 15%-20%
• Demand for products still strong

Some thoughts:

My concern with CSL has always been overpaying for the Vifor acquisition. When I saw the annual report for Vifor years ago, the revenues looked a bit "lumpy" at time of acqusition. Appears from the above CSL may have overpaid for Vifor and a rare slip-up from what seems to be a quality company.

And of course the competition and currency headwinds seem worse than anticipated now with majority of sales outside of US which also means spending costs to those countries as well.

Morningstar published an update this morning following CSL's update, broker downgrades and share price dip ... Unsure if it's only available to premium or not so ...

Does the CSL selloff present a rare opportunity for investors?

Shares in the ASX giant were sold off on Wednesday as currency headwinds weigh on CSL's near-term margin recovery, but we believe the long-term recovery is intact.

CSL at a glance: 

• Fair value estimate: $315
• Morningstar rating: 3 stars
• Morningstar uncertainty rating: Medium
• Morningstar economic moat rating: Narrow

We maintain our AUD $315 fair value estimate for narrow-moat CSL following a trading update

CSL now expects a foreign currency headwind in fiscal 2023 of USD $230 million-USD $250 million versus previous guidance of USD $175 million

We decrease our fiscal 2023 underlying net profit after tax forecast by just 1% to USD $2.3 billion. However, we decrease our underlying NPAT forecasts over the next three years by an average of 7%. This is largely due to unfavourable currency movements protracting CSL’s margin recovery

Shares in CSL closed down almost 7% on Wednesday to $287.25

Our $315 fair value estimate is based on an Australian dollar/US dollar exchange rate of $0.68 and a forecast five-year revenue growth CAGR of 14.9% and slight margin expansion, resulting in an adjusted five-year EPS CAGR of 15.4%

Our forecast includes five-year immunoglobulin market growth of 9% and CSL's share of the market increasing to 33% from 30% over this period as it benefits from its investment in physical capacity and exclusivity from Hizentra in the US until fiscal 2025

We anticipate the Seqirus vaccine business to grow at a 5% revenue CAGR over the next five years. The pandemic has buoyed the uptake of influenza vaccination and we expect this to largely continue

Haemophilia is currently the most competitive market in which CSL operates and we forecast very limited growth based on Roche’s successful launch of Hemlibra, which requires less frequent dosing than existing CSL or competitor products. The newly acquired haemophilia B gene therapy candidate is expected to launch in fiscal 2024

So we've seen 9-10% knocked off in 2 days, with volumes of 2.5m and 2.3m and a slew of price target downgrades.

On the face of it, this seems over-done, if the margin contraction delay is 6-12m only. However, the price was running up on expecations of a breakout for reasons discussed earlier, and so the market was expecting good news and has been negatively surprised. That sounds like the perfect ingredients for an over-reaction.

On a historical basis, however, the p/e at 38.8 is still quite high (such was the expectation that's been built up after a period of historically modest earnings growth.)

I am potentially interested in adding another 10-20% to my position, but I think I will wait to see if there is further downside on the price. Again, historically, $CSL tends to have reasonable volatility so it would be nice to pick up more around $250 - $270. By the looks of it, there are no obvious catalysts for a positive surprise at the next report, so that offers an 8 month window,.... thinking out loud.

Turning the ship on margins might not be straightforward, so even if I miss the boat this week, other opportunities might arise. I've found patience to be a virtue with $CSL.

Personally I'm waiting for CSL to hit the Vifor placement price of 273.

I've paused for now but have been previously buying whenever under $280.00 but as with @mikebrisy I see no reason to rush in for more right now but rather simply wait and watch for the time being.