CSL Glory Days Over After 12% Plunge
You may have seen CSL’s results today, and the share price is down 12%.
What this teaches you is the old Marcus Today idiom: any company that announces a restructure… sell.
The amazing thing about CSL is almost everybody holds it. Every unimaginative, 20-stock Australian self-directed investor who holds BHP, Rio, the four banks, Woolworths, Wesfarmers, Transurban – and CSL.
The reason everyone holds CSL is because there are very few genuine growth stocks in the Australian market that are large. I think CSL is something like the fifth biggest company, and it has grown the share price since it listed in, what, 1995? The share price is up over 30,000%, whereas the ASX 200 is up about 350%. For years, it sat as the lead holding in any no-brain 20-stock portfolio in Australia.
In the last five years, it’s underperformed quite dramatically. I think in the last five years the ASX 200 is up something like 35%–40%, and CSL is down something like 19%. So it hasn’t gone forever, but now you read that they feel something has materially changed in the attitudes towards vaccines. They’re cutting costs. They’re closing 7% of their plasma collection sites in the US.
They’re splitting off their flu vaccine business into a separate entity by next year. They are doing all the right things, which is when things aren’t going fabulously you batten down the hatches. They’ve battened down the hatches. The market doesn’t like it. Share price down 12%. Any company that says “we’re going to do a restructuring” – the company’s telling you we’re not having a good time.
And that’s what CSL has told us today. Hence the share price is down.
Would you buy it now? No. There are other games to play at the moment. The growth of CSL from 1995 to 2020 – and it boomed over COVID-19 and then dropped off since – that period is over. We’re now in a low-growth stock, struggling compared to other stories in the market.
So CSL, you know, it’s not going to do you much damage, but there are better games to play than a company announcing a restructure. And not surprised to see the share price down.
Winners, Losers, and What’s Next
Henry Jennings cuts through the noise to bring you the results that could define the months ahead.