Jefferies Cuts CSL to Hold with Slashed FY27 Profit Forecast

Jefferies recently lowered its rating on CSL from buy to hold and chopped the price target nearly in half-from A$195 down to A$108-signaling a cautious outlook on the firm's fiscal 2027 profits. The brokerage's warning stems from intensifying headwinds across CSL's key divisions, CSL Vifor and CSL Behring.

At the time of Jefferies' note, CSL shares hovered around A$99.26, a long way from their 52-week high near A$275. The company commands a market cap north of A$48 billion, but that hasn't shielded it from the pressures analysts see coming.

The updated price target blends a price-to-earnings multiple of 11.5 for FY27 earnings and an EV/EBITDA multiple of 8.5, factoring in an exchange rate of 0.72 between Australian and U.S. dollars. Jefferies now anticipates FY27 revenue slipping slightly to about US$15.46 billion, down from a previous estimate of US$15.73 billion. Adjusted EPS forecasts have dipped too, with FY27 at US$5.97 and FY28 at US$6.26-both roughly 2% below prior predictions.

Digging deeper, CSL Vifor, which is expected to make up 15% of FY26 revenue, is facing waves of pressure. Generics are eating into its iron sucrose injection sales, the U.S. health insurers are tightening their step-edit reimbursement rules, and Velphoro has lost preferred status in the TDAPA program.

Adding salt to the wound, two generic iron sucrose products gained FDA approval last August, triggering sharp price drops in early 2026. Jefferies projects a 15% revenue fall for Vifor's iron portfolio in FY27 and a 300 basis point hit to EBIT margins, which were estimated at 48.1% in FY26.

The interplay between U.S. Centers for Medicare and Medicaid Services pricing policies and CSL's product pricing reveals a challenge: Injectafer costs roughly US$1,586 per full course, versus just US$194 for competitor Venofer. That's over eight times the price, putting pressure on market acceptance. Velphoro, representing a modest portion of revenue, faces a 50% plunge next fiscal year as it moves into the standard dialysis payment bundle.

There's also regulatory uncertainty on Tavneos, another CSL product, with the FDA's Center for Drug Evaluation and Research proposing its removal from the U.S. market. This drug brought in about US$112 million for CSL in FY25, and Jefferies expects its revenues to be halved by FY27.

Turning to CSL Behring, which accounts for nearly 70% of group revenue, the outlook isn't rosy either. Immunoglobulin prices in the U.S. are growing but at a slower pace than usual, weighed down by unusually high inventories at the end-user level. Meanwhile, albumin sales have steadied in China, but their market value is shrinking, expected to slice about US$200 million in revenue. Added to that is a US$300 million impact from normalizing U.S. immunoglobulin inventory levels.

CSL's current forward price-to-earnings ratio stands at around 11, a steep drop compared with its historical average north of 32. This dichotomy paints a picture of a stock priced for some of these challenges but still potentially facing a tricky road ahead.