CSL shares bounced in July after a brutal year: What's next?

After enduring a painful 12 months, CSL Ltd (ASX: CSL) shares finally gave investors some relief in July.

The shares rose around 6% during the month to $123.06, snapping a prolonged losing streak that has seen the ASX healthcare share stock plunge roughly 55% over the past year.

A volatile month for CSL shares

July was anything but smooth for CSL investors. CSL shares surged about 10% during the first week of the month before giving back almost all those gains.

However, sentiment improved dramatically on Thursday after the company released its only price-sensitive announcement for the month, sending the shares up roughly 7% in a single session.

The catalyst was an update on Horizon 2, CSL's next-generation immunoglobulin manufacturing process. The company announced it will commence clinical trials from mid-2027 at its Broadmeadows facility, with the technology designed to produce more immunoglobulin from the same volume of plasma.

Regulatory discussions with the US Food and Drug Administration (FDA) and European Medicines Agency (EMA) are already underway, while the trials will run alongside the expansion of its Kankakee, Illinois manufacturing site.

If successful, Horizon 2 could improve manufacturing efficiency and support stronger long-term profitability.

Why have CSL shares fallen so far?

Despite July's rebound, CSL shares remain under significant pressure. Investor confidence has been hit by a series of earnings downgrades, uncertainty surrounding the CEO transition, and almost US$5 billion in non-cash impairment charges linked to the company's Vifor acquisition.

Even so, CSL's core business remains largely intact. The company is one of the world's leading plasma therapy providers, supported by a global plasma collection network, specialised manufacturing expertise, and regulatory approvals that have taken decades to establish.

Those competitive advantages remain difficult for rivals to replicate.

What should investors watch next?

CSL's FY26 results on 18 August could prove to be the next major catalyst for the shares.

Investors will be watching for an update on the final impairment charge, progress on the company's transformation program targeting US$500 million to US$550 million in annual savings by FY28, and any news on the appointment of a permanent chief executive.

Another key focus will be management's planned demerger of the Seqirus influenza vaccine business by the end of FY26, which could unlock additional shareholder value.

Despite the stock's disappointing performance, brokers remain optimistic. UBS recently reiterated its buy rating with a $158 price target, while Morgans has a buy rating and a $147.59 target. The broader analyst consensus sits at $140.15, implying meaningful upside from current levels.

The post CSL shares bounced in July after a brutal year: What's next? appeared first on The Motley Fool Australia.

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.

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