CSL Plunges 17% – Value Oversold Under the Shadow of Restructuring?

Today, CSL $CSL LIMITED(CSL.AU)$ , the largest healthcare giant on the Australian stock market, released its latest earnings report and announced a major restructuring plan. While the results were broadly in line with expectations, the restructuring still triggered a nearly 17% plunge in the company’s share price on the day. Where is the market panic coming from, and what impact could this restructuring have on the company’s long-term outlook?

Source: Google Finance

CSL Overview

CSL Ltd is Australia’s largest healthcare company and a global leader in biopharma. It’s the flagship stock in the ASX healthcare sector, focusing on the R&D and commercialization of innovative biopharmaceuticals. The company has three main divisions:

• CSL Behring – specializes in plasma therapies, offering treatments for rare and serious conditions such as hemophilia, immune deficiencies, and genetic disorders;

• CSL Seqirus – focuses on influenza vaccine development and production;

• CSL Vifor – acquired in FY23, developing drugs in iron deficiency, kidney disease, and cardiovascular health.

FY2025 Performance

For the year ended June 2025, CSL $CSL LIMITED(CSL.AU)$ reported revenue growth of 5%, at the low end of its 5–7% guidance range:

• CSL Behring: revenue up 6%, with immunoglobulin (Ig) products growing 7%. However, the U.S. Medicare Part D reform had about a US$100m negative impact.

• CSL Seqirus: revenue up 2%. Falling U.S. vaccination rates were a drag, but this was offset by demand for H5 bird flu and Japan’s COVID vaccines.

• CSL Vifor: revenue up 8%, driven by strong kidney drug sales.

Adjusted net profit rose 14%, beating the company’s guidance range (10–13%), thanks to a 15% cut in SG&A expenses. Adjusted EPS came in at US$6.65, up 10%. The dividend was raised 11% to US$2.92 per share, and CSL announced a US$750m buyback program starting in FY26. Looking ahead, management guided for FY26 revenue growth of 4–5% and adjusted net profit of US$3.45–3.55b, up 7–10% (excluding restructuring costs).

Source: CSL FY25 Earnings

Major Restructuring Plan

CSL $CSL LIMITED(CSL.AU)$ also dropped a bombshell with a sweeping restructuring plan:

Cost-cutting and efficiency drive:Integrating R&D and commercial teams to improve alignment;Streamlining its pipeline to reduce fixed costs;Shutting underperforming plasma centers and improving manufacturing. This means cutting about 3,000 jobs, or 15% of its workforce. The goal is US$500–550m in annual pre-tax savings by FY2028. But the plan also comes with a hefty one-off bill of US$700–770m, including US$400–450m in cash costs.

Source: CSL FY25 Earnings

Business spin-off: CSL announced it will spin off the Seqirus vaccine division and list it separately on the ASX. The move is meant to give Seqirus more strategic flexibility while simplifying the group structure. For investors, it creates the option to focus on CSL’s core differentiated businesses. The spin-off is targeted for completion by FY26 year-end, pending regulatory approvals.

Source: CSL FY25 Earnings

Investor Concerns

The market reaction was brutal: CSL’s shares plunged 17% in a single day, wiping more than A$20b off its market cap and hitting a six-year low. While the FY25 numbers were solid and in line with expectations, investor worries are squarely focused on the restructuring.

• The US$700–770m one-off restructuring charge is front of mind. Even though CSL expects US$500m+ in annual savings within three years, investors are skeptical that cutting R&D and consolidating teams won’t disrupt product development and commercialization, ultimately affecting long-term growth.

• The Seqirus spin-off also raised eyebrows. The vaccine unit has been CSL’s biggest headache, with declining U.S. vaccination rates making it the only division to post clear profit and margin pressure in the past year. Add to that the political climate — vaccine mandates are controversial, and the new U.S. Health Secretary, Robert F. Kennedy Jr., is famously anti-vaccine. This creates extra policy uncertainty. Given that backdrop, spinning off Seqirus now seems poorly timed. While it could highlight the value of Behring and Vifor, Seqirus’ own valuation may get pushed even lower, which could prompt long-term investors to sit on the sidelines until after the split and then selectively invest in the businesses that align with their strategy.

Was CSL $CSL LIMITED(CSL.AU)$ Oversold?

There’s a strong case the sell-off was overdone. The US$700–770m restructuring cost will likely knock about US$1.50 off FY26 EPS — not trivial, but hardly catastrophic. The future cost savings could fully offset that drag. From CSL’s growth guidance, its long-term earnings trajectory looks intact. Seqirus only makes up around 14% of revenue and isn’t the company’s core growth driver, so it shouldn’t justify such a steep sell-off.

Invesight Viewpoint

CSL’s massive share drop was more about investor nerves than a collapse in fundamentals. Yes, the restructuring is painful, but it could pay off in long-term efficiency gains. And while the Seqirus spin-off comes at a tough time for vaccines, it may ultimately unlock value in CSL’s core businesses. The panic-driven sell-off looks more like forced reshuffling than a reflection of true value. While the pullback may continue in the near term, there’s a good chance this is a case of “value oversold,” and long-term investors could find opportunity in the volatility.