We are witnessing an epic grand supercycle correction in one of the best performing stocks over the last couple of decades. This stock went vertical for 14 years, but what goes up must come down. This stock is owned by many Australian investors, I understand it to be a top 5 name in the Australian stock exchange, a crown jewel in their biotech industry.
This stock peaked in February 2020, as the Covid crash was starting to unravel. The massive drive to produce vaccines kept this stock going. Record profits and stellar growth continued to keep the stock price in a strong position. However, the last 12-16 months have been a disaster. Reasons for the drop:
1. Biotech de-rated post COVID boom
2. RFK and general anti-vaccine sentiment from the public
3. Earnings compression in this capital intensive business. Single digit near term growth
The technicals line up with the fundamentals - an epic 5 wave move up. Followed by an ABC correction, rejected at the Golden Pocket retracement. So where do we sit down? The 200 Month moving average (yes, the monthly, a complete reset!). The Golden pocket retracement level and RSI of 29, another full reset.
Is there reasons to be bullish? Not in the short term, this is not a quick trade and requires patience. If you are indeed a long term investor, expect a 18-24 month turnaround story just to get back on track in the world's leading Plasma derived therapeutics company. CSL is also the second largest influenza producer, though they pan to spin off this business (Seqirus). Companies like this are not built overnight, it takes many decades and the barrier to entry are extremely high.
I will DCA here for a longer term hold. This adds defensiveness to any tech heavy portfolio. I would like further downside pain before scaling in more heavily. Not financial advice.
This stock peaked in February 2020, as the Covid crash was starting to unravel. The massive drive to produce vaccines kept this stock going. Record profits and stellar growth continued to keep the stock price in a strong position. However, the last 12-16 months have been a disaster. Reasons for the drop:
1. Biotech de-rated post COVID boom
2. RFK and general anti-vaccine sentiment from the public
3. Earnings compression in this capital intensive business. Single digit near term growth
The technicals line up with the fundamentals - an epic 5 wave move up. Followed by an ABC correction, rejected at the Golden Pocket retracement. So where do we sit down? The 200 Month moving average (yes, the monthly, a complete reset!). The Golden pocket retracement level and RSI of 29, another full reset.
Is there reasons to be bullish? Not in the short term, this is not a quick trade and requires patience. If you are indeed a long term investor, expect a 18-24 month turnaround story just to get back on track in the world's leading Plasma derived therapeutics company. CSL is also the second largest influenza producer, though they pan to spin off this business (Seqirus). Companies like this are not built overnight, it takes many decades and the barrier to entry are extremely high.
I will DCA here for a longer term hold. This adds defensiveness to any tech heavy portfolio. I would like further downside pain before scaling in more heavily. Not financial advice.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.