---
endpoint: analytics
pattern: Healthcare
status: done
latency_ms: 252599
conversation_id: 118c6bba-4008-4f3b-bf85-522a4c0a3083
citations: 19
created: 2026-05-31 20:48:40Z
---

# What’s the bull case bear case for CSL?

# CSL Ltd (ASX: CSL) — Bull Case / Bear Case

**Source note**: Internal CLSA notes range Feb–Jun 2025 (latest 17-Jun-2025). The most recent ground-truth datapoint is CSL's **Business Update Call dated 10-May-2026**, where management materially downgraded FY26 guidance and flagged ~US$5bn of fresh impairments. The bear case has hardened since the latest CLSA refresh.

---

## Bull Case

**1. Durable, structurally stable industry — oligopoly with no patent cliffs.** Interim CEO Gordon Naylor reframed the macro: the plasma therapeutics industry is "fundamentally, structurally stable and growing" — small number of vertically integrated players, fairly bio-generic products from human plasma, and the absence of patent cliffs makes the market structure "highly durable" with "considerable runway remains for future growth." [11] Even after the downgrade, management emphasised that CSL "is very profitable, has metronomic cash flows, and significant financial capacity." [11]

**2. CSL is still the low-cost producer.** Asked directly whether CSL is still the lowest cost provider on IG, Naylor's short answer was "yes" — "it's reflected in the gross margin structure for Behring, which continues to be to be pretty robust" — albeit with room to consolidate the advantage. [12]

**3. Behring gross-margin recovery is the central catalyst.** CLSA's primary catalyst is the multi-year Behring GM recovery accelerating into FY26/FY27 as plasma yield gains materialise [2]. In 1HFY25 Behring GM was 51.1% (+118bps), the Rika rollout was at 220 of c.350 centres with a ~10% yield benefit, and CLSA modelled a trajectory FY25 50.8% → FY26 52.3% (+150bps) → FY27 54.2% (+190bps). [3] The GM recovery levers are well-defined: CPL reduction (donor fees, RIKA/I-Nomi, centre efficiencies), new product launches (HEMGENIX, HIZENTRA PFS, ANDEMBRY), ASP mix shift, Ig yield improvements, and scale/efficiency. [4]

**4. ANDEMBRY (Garadacimab) FDA approval is a tangible new growth pillar.** Approved mid-2025 with immediate US launch — CLSA models **+10.2% five-year CAGR to FY29CL** for the combined HAE prophylaxis portfolio (ANDEMBRY + Haegarda) and an incremental **38bps benefit to Behring GM by FY29CL**. [8]

**5. Vifor IV iron — soft, but the long-term thesis is intact.** Vifor beat expectations in 1H25 with revenue +7% YoY, IV iron +3%, European volumes +6% despite generic competition, and US Injectafer +3%; GM expanded 74bps. CLSA remains positive on the long-term IV iron franchise. [5] [1]

**6. Seqirus optionality — innovation in flu, demerger flexibility, and a potential Vinay Prasad tailwind.** The operational separation of Seqirus is "now largely complete" — retaining demerger optionality at no incremental cost. [Earnings call] CSL retains sectoral leadership in influenza vaccines with bird-flu/pandemic-prep upside, and CLSA's review of new FDA CBER director Dr Vinay Prasad concluded he is supportive of protein-based flu vaccines while creating regulatory drag on competing mRNA Covid+flu combos — a **net positive for CSL's Seqirus**. [7]

**7. Valuation is undemanding.** CLSA uses a blended 1-yr fwd 27.6x and 2-yr fwd 24.6x — **both 1 standard deviation below CSL's 10-year trailing average PE Rel** against ASX100 ex resources/financials/REITs. [9] Implied 12-month PT of A$330 vs A$239.10 at 17-Jun-2025 = ~38% upside.

**8. Self-help is well underway.** Management called out an "extensive transformation program," R&D streamlining, Behring/Vifor commercial integration synergies, targeted commercial investments yielding "green shoots," and signs of US IG market-share trend reversal. [11]

---

## Bear Case

**1. FY26 guidance downgrade — earnings are going backwards.** On the 10-May-2026 business update, management cut FY26 revenue guidance to **~US$15.2bn (down 2% on FY25)** and **NPATA ex-restructuring/impairment to ~US$3.1bn (down 4%)**. Drivers: a ~US$300m US IG channel-inventory unwind, ~US$200m China albumin shortfall, and US$150m of smaller hits including the Middle East conflict (Iran sales pause), slower HEMGENIX, and heightened generic competition on iron. [15]

**2. ~US$5bn of further non-cash impairments — Vifor was over-paid.** Management guided to "noncash impairments of around $5 billion in addition to the impairments already taken at the first half," concentrated on **Vifor intangibles** and selected PP&E. The Vifor carrying values were set in 2022 at acquisition and are now being written down. [16]

**3. Behring gross margin will go *backwards* in FY26.** CFO Ken Lim told the May-2026 call that "our current outlook is that the Behring gross margin may fall by around 1% versus 2025." [19] The US$300m HIZENTRA channel hit, China albumin pricing decline and high-margin product weakness all hit GM. The CLSA-modelled 150bps FY26 GM step-up has therefore failed to materialise — pushing the bull thesis out another 12–24 months.

**4. CSL has lost share in its largest market.** Naylor conceded "**we are now the third largest IG player by volume in the US**, although we do retain global volume leadership" — competitors caught up on supply chain and portfolio breadth and CSL was slow to respond. [14] HIZENTRA also lost share to new subcutaneous entrants and Kcentra lost a contract to Octapharma (-20% in 1HFY25). [10] [6]

**5. Vifor iron franchise is rolling over and nephrology is next.** Iron fell ~15% in 1H and "we expect to see an increase in that rate of decline." The major nephrology growth driver VELPHORO benefits from a two-year TDAPA reimbursement window that **ends at the end of calendar 2026**, after which nephrology declines. [17] A third European generic (Viatris) adds further pressure. [5]

**6. ROIC has been falling for a decade.** Invested capital is ~US$32bn and management openly admits "it's clear that not all of this is working as hard as it should be." [13] A 10-year lookback diagnosed the decline in ROIC as driven by a growing asset base that has been less productive than anticipated, plus late-stage R&D failures and market-share losses — these are the issues now triggering the impairments.

**7. Leadership uncertainty — interim CEO, chair succession, and Behring commercial head retirement.** Gordon Naylor is interim CEO ("having an orderly leadership transition plan is critical for CSL as we navigate through these challenges") and explicitly won't be a candidate; board is "actively engaged in chair succession"; and US/International Behring head Andy Schmeltz is retiring at FY-end (succeeded by ex-Pfizer Diego Sacristan). [18] Strategic momentum risk while three top seats turn over simultaneously.

**8. Seqirus headwinds compounding.** In 1HFY25 Seqirus revenue was **-8% YoY, flu sales -15%** with vaccine fatigue worsening, CSL losing share to Sanofi, and pricing competition on Fluad. [6] CLSA rebased FY26+ Seqirus revenues -6% vs prior model. [3 — modeling note via OS chunk index 45]

**9. US policy / regulatory overhang.** CLSA's 7-May-2025 note ("Thunderstruck") highlighted that with **US tariff risk on pharma on the horizon** and an **uncertain US regulatory framework** under the new FDA CBER director, the near-term outlook is less clear "until yield gains deliver earnings acceleration into c.2HFY26CL" — they cut their rating from HC O-PF to plain O-PF. [7] The 10-May-2026 update suggests even 2HFY26 acceleration is now at risk.

---

## Snapshot Comparison Table

| Item | Bull (CLSA, Feb–Jun 2025) | Bear (CSL update, 10-May-2026) |
|---|---|---|
| FY26 Revenue (US$bn) | ~16.7 (CLSAe) [d8409888 table] | ~15.2, down 2% YoY [15] |
| FY26 NPATA (US$bn) | ~3.56 (CLSAe) | ~3.1 ex-impairment, down 4% YoY [15] |
| Behring GM FY26 | 52.3% (+150bps vs FY25) [3] | Down ~1pt vs FY25 [19] |
| Impairments | — | +US$5bn (Vifor + PP&E) [16] |
| US IG position | Recovering share, Rika tailwind | #3 by volume, $300m channel unwind [14] [15] |
| Vifor iron | 7% growth 1H25, IV iron resilient [5] | -15% 1H, decline rate accelerating; VELPHORO/TDAPA expiry end-2026 [17] |
| Catalyst | Behring GM accel FY26/27, ANDEMBRY +10.2% CAGR [2] [8] | None near-term; CEO/chair transition; impairment overhang [18] |
| Rating / PT | O-PF, A$330 (17-Jun-2025, ~38% upside) | Stale — CLSA has not re-rated post May-2026 downgrade |

---

## Net Read

The **structural bull case** (oligopolistic plasma industry, low-cost-producer status, ANDEMBRY pipeline, depressed PE Rel) is largely intact, but the **timing has slipped sharply**. CLSA's "washout event" framing from Feb-2025 [2] has been overtaken by a second, harder downgrade in May-2026 [15] [19] plus ~US$5bn of fresh impairments [16] — meaning the Behring GM recovery and earnings re-acceleration that anchors the bull case is now an FY27+ story rather than FY26. Until management successfully transitions leadership, stabilises US IG share, and demonstrates the Rika-driven margin step-up, the stock screens as **deep-value with execution risk** rather than a clean compounder.

---

**Sources**
[1] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Investment thesis — 607950323LinqAlpha.PDF
[2] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Result summary / catalyst — 607950323LinqAlpha.PDF
[3] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Behring GM trajectory & Rika — 607950323LinqAlpha.PDF
[4] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Behring margin recovery drivers table — 607950323LinqAlpha.PDF
[5] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Vifor IV iron section — 607950323LinqAlpha.PDF
[6] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Seqirus weakness — 607950323LinqAlpha.PDF
[7] CSL — O-PF (Thunderstruck) — CLSA, 7-May-2025 — Vinay Prasad / regulatory review — 607958392LinqAlpha.PDF
[8] CSL — O-PF (ANDEMBRY approval) — CLSA, 17-Jun-2025 — Garadacimab FDA approval — 607962154LinqAlpha.PDF
[9] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Valuation 27.6x/24.6x (−1 SD) — 607950323LinqAlpha.PDF
[10] CSL — O-PF (Shot through the heart) — CLSA, 11-Feb-2025 — Post-result takeaways table — 607950323LinqAlpha.PDF
[11] CSL Business Update Call, 10-May-2026 — Industry structure & cash generation (Gordon Naylor)
[12] CSL Business Update Call, 10-May-2026 — Lowest-cost provider confirmation (Naylor)
[13] CSL Business Update Call, 10-May-2026 — US$32bn invested capital, ROIC decline (Naylor)
[14] CSL Business Update Call, 10-May-2026 — #3 IG player by US volume, Seqirus separation (Naylor)
[15] CSL Business Update Call, 10-May-2026 — FY26 revenue $15.2bn, NPATA $3.1bn (Ken Lim)
[16] CSL Business Update Call, 10-May-2026 — ~US$5bn impairments, Vifor focus (Ken Lim)
[17] CSL Business Update Call, 10-May-2026 — Iron franchise decline, VELPHORO TDAPA expiry end-2026 (Ken Lim)
[18] CSL Business Update Call, 10-May-2026 — CEO/chair succession plan (Naylor)
[19] CSL Business Update Call, 10-May-2026 — Behring GM down ~1pt FY26 (Ken Lim)

## Citations

- [1] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [2] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [3] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [4] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [5] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [6] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [7] **607958392LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607958392LinqAlpha.PDF>
- [8] **607962154LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/06/607962154LinqAlpha.PDF>
- [9] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [10] **607950323LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/02/607950323LinqAlpha.PDF>
- [11] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [12] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [13] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [14] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [15] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [16] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [17] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [18] **CSL Ltd., Business Update Call, 10-May-2026 8** · external
- [19] **CSL Ltd., Business Update Call, 10-May-2026 8** · external

