"No longer a blue-chip" - CSL's fall from grace plunges new depths

For a stock once considered untouchable and the pinnacle of Australian corporate excellence, CSL (ASX: CSL) is testing investor patience. After missing key estimates, announcing a surprise CEO change the evening before results, and watching the share price slide further, confidence is clearly fragile.

Marcus Today’s Henry Jennings isn't impressed. He described today's results as disappointing, questioned management’s ability to deliver its “ambitious growth plan,” and labelled the timing of the CEO announcement a “terrible look” that further eroded trust.

That 'blue-chipness has' definitely faded and [CSL] is no longer a blue-chip by any stretch of the imagination.

While CSL has leaned heavily on efficiency and second-half recovery rhetoric, Jennings remains unconvinced - and says the stock is still a SELL. We sat down to unpack what went wrong, why the market reacted so badly, and what CSL would actually need to do to win back credibility.

CSL opened 8.9% lower to $156.01 and is down 11.4% at the time of writing. The stock is trading at the lowest level since April 2018.

Key numbers/announcements to note

• Revenue down 4% to $8.33bn vs. $8.51bn ests (2% miss)
• Underlying NPATA down 7% to $1.95bn vs. $2.05bn ests (5% miss)
• Interim dividend flat at 130 cps vs. 133 cps ests (2.2% miss)
• Total after-tax non-restructuring impairments of ~$1.1bn, including $843m in intangible assets (CSL Vifor impacted by generics, CSL Seqirus licensing) and $170m in property, plant and equipment
• Statutory net profit after tax down 81% to $401m
• FY26 guidance reaffirmed, including NPATA growth of 4-7% and revenue growth of 2-3%
• Outlook commentary flagged Seqirus expecting a lower second-half due to "normal seasonality of the global influenza business" and Vifor to be "adversely impacted by generic competition in iron products."

Do you currently hold CSL and what is your rating?

No, we don’t hold CSL currently - I think it’s probably still a sell.

What matters from the results?

Revenue of US$5.45 billion - that was down 7%, so that’s not particularly good and the dividend was cut to A$1.30 from A$1.33. So those are all pretty disappointing.

But I suspect the thing that’s hanging over them as well is the Paul McKenzie issue with the retirement yesterday, which came out late after hours and pushed the stock down 5% on that news.

That alone looked as if the results were going to be bad, to be honest. So it wasn’t a surprise that they weren’t particularly good.

The surprise is whether they were going to be able to make it up in the second half. They’re still talking as if they can, but I think Seqirus and Behring are still problematic.

And some of those charges they’re taking on the iron deficiency side of things are also an issue.

Let's dig deeper into that. Management mentioned "ambitious growth plan" and "efficiency" no less than 19 times in the release. Based on the 1H numbers and tone, do you think they can deliver growth in FY26?

I don’t, to be honest. 

We’ve got a new CEO at the helm. They clearly didn’t think that Paul McKenzie was the man to take things forward and make those efficiency gains.

They’re still looking for FY26 guidance of 2–3% revenue growth, which I have to say, given what’s happening in the US and around the world, and the generics that are coming in as well - which are clearly affecting them - I think it’s going to be a struggle.

Gordon Naylor being the new interim CEO... he’s got a big job in front of him.

A change in management always puts more risks on the table, to be honest, and I think it’s going to be a bit of a stretch for CSL to make it up in the second half and come through for a gold medal.

Yet CSL also expanded its buyback by 50%. How do you see this?

Buybacks are always easy in some respects because they’re flexible.

You can announce a buy-back, but you don’t have to actually do it. You don’t have to follow through necessarily. If you pay out a dividend, that money’s gone. 

Buybacks can be tailored. They can be sped up. They can be slowed down. They can be extended. It gives the company some flexibility, which is good.

But the cut in dividends won’t be good.

And the way they’ve announced these results, coupled with the retirement of Paul McKenzie last night, has just made them once again look a little bit shambolic and a little bit amateurish.

We saw this in the last announcement with Seqirus - first it was going to be demerged, then it wasn’t. You get the feeling there’s a certain amount of - I wouldn’t say panic - but the board clearly needs someone to really shake things up.

And Gordon Naylor, they’ve obviously said, is the man to do that rather than Paul McKenzie, but I think the market - the jury is out.

I certainly think this is still a sell, although it’s not the most expensive thing in the world these days. But I think the second half is going to be a stretch.

You’ve used words like 'shambolic' and 'amateurish'. Does CSL have a shareholder expectations management problem?

I think it does. 

For a long time it’s been a market darling, and many people were happy to pay very high multiples for it on the basis that blue-chipness.

That blue-chipness has definitely faded and is no longer a blue-chip by any stretch of the imagination.

The share price has declined from about $280 in August ’25 to around $170 now. That shows shareholders are not happy.

It’s gone from being a growth stock with a good outlook to being under pressure in a variety of its fields, especially vaccines. And under the current US administration, that’s not going to change.

I don’t know what they were doing announcing it at 4:05 pm last night when the market closes at 4:10 pm. They should have either done it days beforehand or announced it with the results as part of the transformation strategy.

At the close, the share price was up about 2%. By 4:10pm, it was down 5%. That’s a big market reaction and it’s a terrible look.

Retail shareholders don’t necessarily get to see those announcements until after the market’s closed. Clearly the algos and institutions jumped on it, but if you’re trying to rebuild trust with the retail base, that is not the way to do it.

That is an absolute fail of the first degree. And I think it goes to the core of what CSL has become. It’s a little bit all over the place, to be honest.

There’s a lot of bad news priced in. What could you be wrong about? What’s the best-case scenario where CSL turns this around?

The new CEO, Gordon Naylor; it’s now up to him to execute, get efficiencies, cut costs, and drive the business. But the headwinds are still there. They haven’t changed.

There’s nothing they can really do about the marketplace. It’s about efficiency and transformation. My hope is they don’t do something even sillier and try to buy something.

I lost interest in the stock when they bought Vifor. I thought they paid too much and didn’t do enough due diligence.

Now they’re writing money off on what they paid for that business. That’s coming to fruition, but Mr Naylor has got a big job in front of him, and you don’t need stuff-ups like yesterday to make that job any easier.”

For us at Marcus Today, this is still an avoid. There will come a price where it’s worth a look, but we need evidence that the new man is up to the task. His skill set is going to be well and truly needed to turn this around.

Given the chaos and valuation, does CSL become a takeover target?

That’s an interesting question...

There are a lot of deals being done in pharma, but this is an $83 billion company, so it would take someone big. I think it’s probably off the cards for the time being.

The headwinds aren’t going away, and any predator would probably wait to see if Gordon Naylor can make progress on efficiencies and cost-cutting.

That’s usually what predators do - make the hard decisions previous management couldn’t. I’m sure some people are running the slide rule over it, but $83 billion is a big bite.

We’ve seen big bites before, but at the moment the headwinds are enough to put anybody off.