CSL crashes 15% in worst selloff since 1994 ASX listing

CSL (ASX: CSL) suffered its worst single-day selloff since the biotech giant's 1994 ASX debut, falling more than 15% on Tuesday as investors dumped the stock following a mixed FY25 result and disappointing guidance.

The selloff far exceeded previous major corrections during the pandemic, Global Financial Crisis, and various earnings disappointments, dragging the stock to levels not seen since Liberation Day lows, and before that, October 2019.

Mixed earnings, underlying challenges

The numbers for FY25 were generally in-line with analyst expectations, though UBS described it as a "low quality NPAT beat, driven by Seqirus sales plus lower R&D and tax."

• Revenue up 5% to $15.6bn vs. $15.8bn estimates (1.0% miss)

• NPAT up 17% to $3.0bn vs. $2.96bn estimates (1.0% beat)

• NPATA EPS up 10% to $6.65 vs. $6.55 estimates (2.0% beat)

• Final dividend up 12% to $1.62, total dividend up 11% to $2.92 vs. $2.96 estimates (1% miss)

CSL also announced plans to demerge its Seqirus business into a separate ASX-listed entity, alongside a multi-year on-market buyback of $750 million, set to commence in FY26 and progressively increase over the medium term.

The result was accompanied by aggressive cost cutting measures aimed at reducing net headcount by up to 15%. Together with other strategic initiatives, this is expected to drive annualised cost savings of $500-550 million progressively over the next three years, though the move will incur one-off restructuring costs of $700-770 million in FY26.

Guidance drives selloff

The market's harsh reaction was largely driven by FY26 guidance that fell short of analyst expectations. CSL forecast:

• Group revenue growth of 4-5% vs. Citi estimates of 7.3%

• NPATA growth of 7-10% to $3.45-3.55bn vs. Citi estimates of 15.5%

RBC Capital Markets analyst Craig Wong-Pan noted his views that while CSL's FY25 underlying NPATA came in line with consensus, "the weakness in CSL Behring, lower than expected FY26 guidance and transformation initiatives create somewhat of a messy result" that would weigh on the stock.

A shell of its former self

The brutal selloff highlights how CSL has fallen from grace. Prior to the selloff, the stock was trading at just a 3% premium to the broader market versus its 10-year average of 73%, according to Morgan Stanley.

Once regarded as a healthcare stalwart with defensive growth characteristics, CSL has now reported four consecutive earnings misses. Key performance metrics like return on equity and return on assets have declined substantially since the Vifor acquisition in 2021-22.

Previous earnings disappointments and share price reactions include:

• 12 Feb 2024: -4.9% ($290)

• 13 Aug 2024: -4.5% ($294)

• 11 Feb 2025: -4.9% ($257)

The bottom line

The stock's intraday chart highlights aggressive selling pressure. It spent effectively the entire day trending lower, from a -9.5% open to declines of more than -16% towards market close.

CSL intraday price chart (Source: TradingView)

Analysts will likely remain Buy-rated given the valuation reset and perceived quality, with UBS' first take retaining a Buy rating and $310 target price. However, the loss of market confidence, questionable growth guidance and complex restructuring will likely drive continued volatility in the near-term.

While CSL continues to generate steady growth and appears technically oversold, its streak of earnings misses, ongoing execution challenges and restructuring has created what Wong-Pan described as "a messy result".

And if there's one thing markets have taught me, is that it has little appetite for mess and uncertainty.