Now could be the time to pounce on CSL Ltd (ASX: CSL) shares.

That's the view of analysts at Goldman Sachs, which have just initiated coverage on the company.

CSL is a global biotechnology company with a world-class portfolio of therapies. This includes therapies that treat immune deficiencies, haemophilia, other rare diseases, vaccines to prevent influenza, and therapies in iron deficiency and nephrology.

What is the broker saying about CSL shares?

According to the note, the broker acknowledges that recent times have been challenging for the company and this has weighed on its shares. It said:

The last five years have been particularly challenging for CSL, with the business navigating material inflationary pressures to its plasma collections costs, the threat of a new entrant (anti-FcRn) in its core Immunoglobulin (IG) market, its Vifor acquisition encountering the entry of generics quicker than anticipated and late-stage R&D setbacks.

However, Goldman believes that work behind the scenes with its key IG business has set CSL up for growth. It adds:

Whilst some of these developments have led to structural changes to CSL's business, we believe the company's proactive investments in its IG franchise and new product launches in the Behring portfolio are set to increase ROIC in this new operating environment.

Initiated with a buy rating

The note reveals that Goldman Sachs has initiated coverage with a buy rating. This is based on its belief that IG sales will grow in the double digits through to FY 2028 and underpin margin improvements and strong earnings growth. It said:

Our Buy thesis is driven by (1) Double digit IG growth (GSe: +12.6% FY23-FY28E CAGR) underpinned by low penetration (including CIDP) and ~100bps YoY market share gains. Our channel checks indicate CSL's competitive advantages are intact, with the expansion in fractionation capacity set to enhance CSL's superior cost profile and supply reliability, (2) Strong Gross Margin (GM%) recovery with Behring plasma collection costs per liter set to meaningfully decline (-14.6% FY26E vs FY24), and (3) Rebound in Seqirus growth from depressed US influenza vaccination rates.

Goldman has a buy rating and $325.40 price target on CSL's shares. Based on its current share price of $275.61, this implies potential upside of 18% for investors over the next 12 months. It also expects a modest 1.8% dividend yield in FY 2025, which boosts the total potential return to almost 20%.

Overall, the broker feels that CSL's shares are cheap and a re-rating could be on the way. The broker concludes:

We adopt a premium of 1.8x as part of our valuation which is close to the 10-year average noting the current share price values the business cheaper relative to its 5 and 10-year averages. We believe ongoing momentum in CSL's IG revenue growth, Gross Margin recovery and execution on market share initiatives in Hemophilia and HAE are key drivers in driving re-rating.