The CSL Limited (ASX:CSL) share price has fallen another 1.6 per cent to trade around $202, bringing the fall from its recent peak of around $230 to over 12 per cent.
We just about nailed the top of the market for CSL shares when earlier this month, we said the CSL valuation was “off the charts.”
It has been virtually all downhill from there for the CSL share price, likely weighed down by nothing more than its own valuation. A $100+ billion company trading at 45 times earnings has a LOT of future growth priced into its share price.
Writing in the August 2018 Schroder Equity Opportunities Fund report, Martin Conlon says that a business like CSL, where the current product portfolio was fairly mature and the product pricing was fair, investors might reasonably accept a return of 8 per cent on their money, equating to 12.5 times a company’s operating profit.