• CSL shares: I weighed up the bull and bear case, and here’s my final verdict

    A young woman sits with her hand to her chin staring off to the side thinking about her investments.

    CSL Ltd (ASX: CSL) shares have had a tough ride over the past couple of years.

    The shares were relatively stable, mostly trading between $250 and $300 between late-2019 until around August last year.

    Then they crashed.

    Between mid-August to late-May this year, CSL shares shed around 64% of their value. On the 3rd of June, the shares closed at an 11-year low of just $92.24 a piece.

    The good news is that since hitting that low, the shares have rebounded around 113% at the time of writing, to $196.91.

    It’s an incredible reversal for the ASX biotech stock.

    Some are now incredibly bullish that the company can keep climbing higher, but some more reserved market experts think there is potential for another tumble ahead.

    I decided to look at both the bull and the bear case for CSL shares, and came up with my own conclusion.

    Here’s what I found.

    The bull case for CSL shares

    CSL has an incredibly dominant market position in a high-growth market. The global biotechnology company develops and delivers biotherapies and vaccines to support people with life-threatening medical conditions. 

    Its plasma therapies business (CSL Behring) is a major powerhouse in the global plasma market. Alongside competitors Grifols and Takeda, the three businesses control around 80% of the global plasma therapy market.

    Then its CSL Seqirus business is the world’s second-largest influenza vaccine manufacturer.

    And its CSL Vifor business is a global leader in iron deficiency and iron deficiency anaemia therapies.

    Its position could well grow stronger, too. There will also be an ongoing need for immunoglobulin, influenza vaccines, and plasma therapies, and CSL is well-placed to scoop up a lot of that demand.

    The company is undergoing an aggressive cost-savings and restructuring plan. In FY26, the company delivered US$176 million in pre-tax savings, which was well ahead of schedule, with more in the works. CSL is aiming to achieve around US$500 million to US$550 million in annual pre-tax savings by late FY28.

    For FY27, the company is guiding a return to growth, including a 5% increase in underlying NPAT, which signals an operational turnaround and bottom line recovery for a once struggling business.

    The bear case for CSL shares

    Key reasons for the sharp CSL sell-off earlier this year were a loss in confidence for CSL’s earnings trajectory, a weaker profit outlook thanks to a lower flu vaccine rate in the US, guidance downgrades, and the sudden exit of its CEO in February.

    The combination, especially within a short period of time, has raised questions about the company’s stability and forward earnings visibility.

    Management called FY26 the year of a huge financial reset and flagged FY27 as the year for growth. But forward guidance of a 5% increase in its NPAT suggests a slow return to growth rather than an explosive one.

    There is the potential that CSL’s ability to generate growth and profit now relies on its aggressive cost-cutting plan rather than true business expansion.

    And let’s not forget the huge operational headwinds the company faced in FY26. These are still in the works. Elevated costs, logistic and shipping issues, softer US vaccine demand, and the cost of its latest restructure are headwinds that are likely to continue at least for the near term.

    Then there is the CSL share price itself. After storming over 110% higher over the past four months, some are questioning whether the rebound is overdone, and whether CSL shares have climbed too high, too quickly.

    My verdict

    When I look at the short term, I’m concerned that CSL shares have rebounded fast over a short period of time. I think there is potential that the shares have raced too far ahead of value, and I wouldn’t be too surprised to see that profit-taking investors step in over coming weeks and send the shares tumbling south again.

    It looks like the latest rally assumes that the growth picture will unfold without a hitch, and that a gradual and consistent path to recovery is likely.

    Any indication that the company is not able to maintain the growth momentum it expects for FY27 could trigger a crash in confidence and widespread selling.

    But, if I look at the broader picture, I’m a little more positive. 

    It looks like the worst is over for CSL shares.

    Management’s structural reset, cost efficiency plans, strong market position, and demand for its products suggest the company is finally getting its ducks back in a row.

    To me, it looks like the long-term road to recovery is now underway for CSL, although I expect a few bumps along the way.

    What do the experts think?

    If we look at expert outlooks, sentiment is mostly positive, but there are mixed messages about whether there is much more upside ahead for CSL shares over the next 12 months.

    TradingView data shows that 11 out of 19 analysts have a buy/strong buy rating on the ASX healthcare shares. And another eight have a neutral stance.

    But the average $187.52 target price implies around a 5% downside at the time of writing. 

    The team at Ord Minnett has an accumulate rating on CSL shares. The broker said it thinks the company’s Behring business can deliver stronger growth through FY27 to FY29. 

    Morgan Stanley is also positive on the shares with a buy rating and a $182 target price. The broker is also positive about improvement out of CSL’s Behring business, which it identifies as the company’s key group earnings driver. 

    The post CSL shares: I weighed up the bull and bear case, and here's my final verdict appeared first on The Motley Fool Australia.

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    Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. 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.

  • How much is needed in superannuation to target $80,000 a year in passive income?

    Australian dollar notes in the pocket of a man's jeans, symbolising dividends.

    Superannuation is a great way to build long-term wealth in a tax-effective manner.

    Figures from industry analyst Chant West show that since the introduction of mandatory superannuation in the early 1990s, the median growth fund has returned 8% per year, well above the inflation rate over that period.

    The big question is, how much superannuation do you need?

    Of course, that depends on what sort of income stream you’d like in retirement, and whether you can afford to save enough during your working life to set yourself up.

    Having a goal in mind is the first step, so let’s see what it would take to generate $80,000 per year in income from your superannuation.

    How much in superannuation savings do you need for $80,000 per year in income?

    For simplicity’s sake, I will calculate this based on dividends alone. However, once people start to draw down on their superannuation, it is, in practice, usually a combination of dividends and share sales (capital gains) that creates the income stream.

    To calculate how much you will need to generate $80,000 per year, you need to make an assumption about how much you can expect to earn from dividends, or the average dividend yield.

    I would argue that with the benefit of franking credits a return of about 7.5% is realistic.

    Franking credits pay back a shareholder for the company tax already paid, which is 30% for a fully franked dividend.

    In practice this means that a 5% fully franked dividend is worth 7.14% once credits are taken into account for retirees who pay a zero per cent tax rate.

    Not all shares you own need to pay this rate. Some can be lower-dividend, higher-growth shares, while some can be high-dividend payers.

    Which shares could I buy to generate an $80,000 income stream?

    An example of the latter is some infrastructure stocks such as Atlas Arteria Ltd (ASX: ALX), which is currently paying a trailing dividend of 7.6%, albeit without franking.

    In the financial services sector, Morgan Stanley predicts Bank of Queensland Ltd (ASX: BOQ) will pay at least a 6% dividend in FY28, while Regal Partners Ltd (ASX: RPL) is paying a trailing dividend of almost 13%.

    Among the major retailers, the dividend yields are a bit lower, with Woolworths Group Ltd (ASX: WOW) paying 2.35% and Coles Group Ltd (ASX: COL) 3.27%, although they do come with the security of large, stable markets.

    Real estate investment trusts can also be good dividend payers, with Arena REIT (ASX: ARF) paying 7.6%, Charter Hall Long Wale REIT (ASX: CLW) paying 7.84%, while Waypoint REIT (ASX: WPR) pays 8.18%.

    The post How much is needed in superannuation to target $80,000 a year in passive income? appeared first on The Motley Fool Australia.

    Wondering where to invest $1,000 right now?

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    Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

  • Pro Medicus: $43m US contract boosts outlook

    A silhouette shot of two business man shake hands in a boardroom setting with light coming from full length glass windows beyond them.

    The Pro Medicus Ltd (ASX: PME) share price is in focus after the company secured a major 7-year, A$43 million contract with Virtua Health in the United States. This deal will see PME’s cloud-based Visage 7 enterprise imaging platform rolled out across Virtua’s health system.

    What did Pro Medicus report?

    • Signed a 7-year contract worth A$43 million with Virtua Health, based in New Jersey, USA
    • The agreement covers the unified Visage 7 Viewer, Workflow, Open Archive, and Cardiology products
    • Contract to be delivered via PME’s cloud-based platform, supporting hospital-wide image access and EHR integration
    • Revenue tied to a transaction-based model, allowing for potential upside
    • Implementation to begin immediately, with full rollout targeted for late Q2/early Q3 2027

    What else do investors need to know?

    Virtua Health is a major healthcare provider in South Jersey with five hospitals and 15,000 employees. This win adds to Pro Medicus’ growing footprint among large US health systems choosing fully cloud-based imaging.

    The deal further validates PME’s CloudPACS strategy, which aims to set industry standards in North American healthcare IT. The contract includes Visage’s new cardiology offering, indicating rising demand for ‘full stack’ unified imaging solutions in major health networks.

    What did Pro Medicus management say?

    Pro Medicus CEO Dr Sam Hupert said:

    Virtua provides outstanding, innovative care to all of South Jersey. They join an ever growing list of Visage 7 clients to opt for our fully cloud-based platform, which, as a result of our CloudPACS strategy, is becoming the standard in the North American healthcare IT market.

    What’s next for Pro Medicus?

    Pro Medicus management reports a strong pipeline across all market segments, with increasing global interest in the company’s end-to-end imaging solutions. The Virtua deal is expected to further entrench PME in the US market and demonstrates traction for their ‘full stack’ strategy including additional specialities like cardiology.

    Planning for the Virtua rollout commences immediately, with the system set to go live from late 2027. PME continues to focus on winning large, long-term contracts with major healthcare providers worldwide.

    Pro Medicus share price snapshot

    Over the 12 months, Pro Medicus shares have declined 38%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 3% over the same period.

    View Original Announcement

    The post Pro Medicus: $43m US contract boosts outlook appeared first on The Motley Fool Australia.

    Wondering where to invest $1,000 right now?

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    Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.