Why I’d buy CSL shares at their 52-week low

The ASX 200 has been strong over the past year, but CSL Ltd (ASX: CSL) has missed the party completely.

On Friday, CSL shares hit a 52-week low of $119.61. That means the healthcare giant is now down around 49% over 12 months.

I think that is an extraordinary fall for one of Australia’s highest-quality global businesses. And while CSL clearly has challenges to work through, I believe the sell-off has created a buying opportunity for patient investors.

This is not just any fallen stock

I would never buy a share simply because it has fallen heavily.

Sometimes a falling share price is the market correctly adjusting to a weaker business. But I think CSL deserves a closer look because of what it still owns.

This is a global healthcare company with leading positions in plasma therapies, vaccines, and specialist medicines. Its products are used to treat serious medical conditions, which gives the business a very different demand profile from a retailer, miner, or airline.

That does not make CSL immune from problems. Plasma collection costs, margin pressure, trial failures, weak demand for albumin in China, and investor disappointment around earnings growth have all weighed on sentiment.

But I do not think those issues destroy the long-term value of the business.

For me, the key question is whether CSL can gradually rebuild confidence. If it can, today’s share price could look very cheap in hindsight.

The market has reset expectations

What makes CSL interesting today is how far expectations have moved.

A few years ago, investors treated CSL as one of the safest growth shares on the ASX. It often traded at a premium valuation because the market believed in its long-term earnings power.

Today, the mood is very different.

Investors are questioning the pace of recovery, margins, balance sheet flexibility, and whether management can return the business to the type of growth profile it once delivered.

I think that caution is understandable. But I also think the share price now reflects a lot of disappointment.

That is where the opportunity may be.

If CSL only needs to show steady progress, rather than perfection, the risk-reward looks much more appealing to me at a 52-week low than it did when the market was pricing in near-flawless execution.

The recovery could be powerful

CSL does not need to become a new business to create value from here.

It needs to execute better, restore margins over time, manage costs, keep reducing investor concerns, and show that its core plasma business still has attractive long-term growth ahead.

I believe it can do that.

Healthcare demand is not going away. Plasma therapies remain difficult to replicate at scale. CSL has global infrastructure, scientific expertise, regulatory experience, and deep relationships across healthcare markets.

Those strengths can be easy to overlook when sentiment is poor.

But for long-term investors, I think they still matter.

There is also something important about buying quality when it feels uncomfortable. The best entry points rarely arrive when every headline is positive. They often appear when investors are tired of waiting and the market has stopped giving a company the benefit of the doubt.

That feels close to where CSL is today.

Foolish takeaway

CSL shares are deeply out of favour, and I can understand why some investors have lost patience.

But I think the market may now be focusing too much on the pain of the past year and not enough on the quality that still sits inside the business.

At a 52-week low, I would be willing to buy CSL shares and give the company time to recover.

It may not happen quickly. But if CSL can regain even part of its former market confidence, I think patient investors could be well rewarded from here.

The post Why I’d buy CSL shares at their 52-week low appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.