CSL Ltd (ASX: CSL) shares slipped 2% to $171.21 on Wednesday, but that hardly dents their remarkable recovery. The ASX biotech stock has surged 30% over the past month and is now up about 90% from its 11-year low of $90 in June.

By comparison, the S&P/ASX 200 Index (ASX: XJO) has lost 4% in the past month.

After such a dramatic rebound, investors are asking a simple question: how much further can CSL shares go?

Why have CSL shares soared?

The catalyst was CSL’s FY26 result. On the surface, it looked ugly, with the $80 billion biotech reporting a US$2.6 billion net loss after tax.

Investors, however, quickly looked beyond the headline figure. The loss included US$7.1 billion of pre-tax impairments and US$799 million in restructuring costs, much of which was non-cash. Most impairments related to CSL Vifor intangibles and under-utilised property, plant and equipment.

Investors had already received a warning in May, when CSL flagged around US$5 billion of impairments and cut its FY26 guidance.

Excluding exceptional items, underlying NPATA fell just 2% to US$3.1 billion. Revenue declined 1% to US$15.8 billion, but still beat analyst expectations.

The result effectively gave investors what they wanted: a reset year, a cleaner balance sheet and an outlook that wasn’t as bad as feared.

Could FY27 send CSL shares higher?

The bull case now centres on FY27.

CSL expects underlying NPAT to grow approximately 5%, ahead of consensus expectations of around 2% growth. Behring is expected to deliver mid-single-digit growth, with immunoglobulins forecast to increase at a mid-to-high single-digit rate.

The biggest challenge remains Vifor, where revenue is expected to plunge about 25% as iron generics enter the market.

Consensus estimates suggest CSL could generate earnings per share of roughly $9.00 in FY27, rising to $9.50 in FY28 and $10.10 in FY29.

At $171.21, CSL shares are valued at around 19 times forecast FY27 earnings. That’s not cheap, but it arguably looks reasonable for a global healthcare leader returning to earnings growth.

By FY29, the valuation falls to roughly 17 times forecast earnings if those estimates are achieved.

What do brokers think?

Brokers aren’t uniformly convinced the recovery has further to run. Of 19 analysts tracked by TradingView, 10 rate CSL shares a hold, while nine have a buy or strong-buy rating.

The average 12-month price target is $173.04, barely above the current share price.

There’s a huge spread between individual forecasts. The most bullish target is $206.76, implying another 21% upside. The lowest sits at $131.49, suggesting roughly 23% downside.

Macquarie is among the most cautious, with a neutral rating and target of just over $133. UBS is more optimistic at $181, while Morgan Stanley has a $172 target.

Foolish takeaway

CSL has staged an extraordinary recovery, but the easy gains may already have been made.

The business is emerging from a difficult period with a cleaner balance sheet and expectations for improving earnings. However, the broker targets suggest the market remains divided over how quickly that recovery will translate into shareholder returns.

At around 19 times FY27 earnings, CSL shares aren’t screamingly cheap. Investors buying today are effectively betting that the company’s earnings recovery will beat expectations.

If it does, there’s potentially more upside. If growth disappoints, the recent 90% rebound leaves plenty of room for the shares to fall.

The post CSL shares are up 90%. How much higher can they go? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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.

Superannuation has become a highly effective tool for investors to generate returns at a lower tax rate. It can be a very effective way for investors wanting passive income.

Pleasingly, superannuation has a lower tax rate than many companies, trusts and individuals. The way superannuation works also means it’s very easy to invest for the long term.

In my view, receiving passive income is one of the top benefits of owning shares. It’s really rewarding to receive passive income from owning ASX shares.

Getting paid money each year for no ongoing effort seems like a compelling arrangement to me.

One of the best benefits about superannuation is that Australians lose less of their passive income return to tax. I think it’s important to remember that it’s the after-tax passive income that investors can use.

If an Australian working full-time receives passive income in their name, they could lose a third (or more) of that dividend income to income tax, which makes the passive income return less appealing.

Following proposed taxation changes earlier this year, superannuation could be the best place to invest for passive income because of the lower tax rate in the accumulation phase of wealth building, compared to an individual owning income-paying assets as a full-time earner.

In retirement, an Australian’s superannuation tax rate could be as low as 0%. We can’t get a lower tax rate than that!

Of course, every household’s taxation situation may be different, so I’ll just look at targeting a particular dividend goal and ignore tax rates for the rest of the article.

How much is needed in superannuation for $70,000 of annual passive income?

Receiving $70,000 of annual passive income sounds great to me. I’d like to get there one day, though I’m a long way off the goal.

Australian superannuation investors should think about what sort of investments they want to own and the scale of the dividend yield of that asset.

In my opinion, ASX shares are the best choice for passive income, partly because of the great franking credits that are attached to dividends.

Based on all of the above, we can see that the required superannuation balance to earn $70,000 each year depends on the dividend yield of the portfolio.

For example, if a portfolio has a 5% dividend yield, it’d require $1.4 million, a 4% dividend yield would require $1.75 million and a 7% dividend yield would require a $1 million portfolio.

It depends on which ASX shares investors choose.

The types of ASX dividend shares I’d buy

There are lots of appealing ideas on the ASX that can deliver good dividend yields.

For example, we can choose wonderful operating companies, fantastic listed investment companies (LICs) and impressive yet discounted real estate investment trusts (REITs).

Some of the names I’d consider with low-to-medium dividend yields but with good growth and/or payout stability include L1 Long Short Fund Ltd (ASX: LSF), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES), Lovisa Holdings Ltd (ASX: LOV) and APA Group (ASX: APA).

Some of the businesses with larger dividend yields include Future Generation Australia Ltd (ASX: FGX), Hearts and Minds Investments Ltd (ASX: HM1), Dexus Industria REIT (ASX: DXI), Telstra Group Ltd (ASX: TLS), Charter Hall Long WALE REIT (ASX: CLW), Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), MFF Capital Investments Ltd (ASX: MFF) and WCM Global Growth Ltd (ASX: WQG).

The post How much is needed in superannuation to target a $70,000 annual passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Hearts And Minds Investments, L1 Long Short Fund, Mff Capital Investments, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wcm Global Growth. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Apa Group, Mff Capital Investments, Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The NEXTDC Ltd (ASX: NXT) share price is in focus today after the company announced a major A$1.1 billion subordinated convertible notes offering, designed to further strengthen its liquidity and fund its Australian data centre development pipeline.

What did NEXTDC report?

• Launched A$1.1bn fixed coupon subordinated convertible notes due 2031
• Notes carry an indicative cash coupon of 1.25%–1.75% per annum, below current senior debt levels
• Initial conversion price to be set 32.5%–37.5% above reference share price, with additional capped call option up to 70% premium
• Pro forma liquidity at 30 June 2026 would have been approximately A$9.8bn post-offer
• Proceeds intended for development pipeline, capped call options, and general corporate purposes

What else do investors need to know?

NEXTDC’s new convertible notes offer more flexibility and carry a lower cash interest rate than the company’s existing senior debt. This lets NEXTDC fund major infrastructure projects while preserving balance sheet strength and headroom for further growth.

The notes are expected to be listed on the Vienna Multilateral Trading Facility and target institutional investors, rather than retail or ASX listing. A “Delta Placement” of up to A$330 million in existing shares will support initial hedging by note investors and sets the reference price for conversion.

NEXTDC’s pro forma liquidity position rises to nearly A$9.8 billion, helping its ambitions to continue expanding its pipeline of data centres across Australia and maintaining operational resilience.

What did NEXTDC management say?

Craig Scroggie, CEO and Managing Director, said:

We are proactively enhancing balance sheet flexibility with efficient capital and continuing to deliver on our capital strategy. The convertible structure funds the next phase of our development pipeline at a lower cash coupon than senior debt and the capped call transactions effectively raise the conversion price and therefore reduce the economic cost of dilution that would otherwise occur. The Offering preserves our senior debt capacity and our balance sheet flexibility to meet the continued growth in customer demand for the capacity NEXTDC is building.

What’s next for NEXTDC?

NEXTDC intends to use the new capital to deliver on its Australian development pipeline, cover transaction costs, and maintain corporate flexibility. The company says the convertible note structure and capped call options will help manage dilution risks while keeping funding costs down.

By continuing to diversify its funding sources and enhance its liquidity, NEXTDC aims to support strong customer-led growth and maintain a robust balance sheet—positioning the business well for further expansion both in Australia and internationally.

NEXTDC Limited share price snapshot

Over the past 12 months, NEXTDC shares have declined 23%, trailing the S&P/ASX 200 Index (ASX: XJO), which has risen 1% over the same period.

View Original Announcement

The post NEXTDC launches $1.1bn convertible notes to fund data centre growth appeared first on The Motley Fool Australia.

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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 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. 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.