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Bayer (BAYRY) Q1 Earnings Beat Estimates, Revenues Up Y/Y

Zacks Equity Research

Bayer AG’s BAYRY first-quarter 2019 core earnings per share increased about 0.06% year over year to 73 cents, per American Depositary Receipt (“ADR”), and beat the Zacks Consensus Estimate of 47 cents.

On Sep 20, 2017, the company changed the ADR ratio. Per the new ratio, four Bayer ADRs correspond to one Bayer ordinary share. This change was reflected in the first-quarter 2019 core earnings per share.

Total sales in the quarter were approximately $14.84 billion, up 32% from $11.24 billion in the year-ago quarter. The Crop Science and Pharmaceuticals divisions registered higher sales year on year, while sales in the Consumer Health segment declined compared with the prior-year quarter’s reported figure.

Shares of the company have plunged 42.2% in the past year against the industry’s growth of 11.9%.

All growth rates mentioned below are on a year-over-year basis, and after adjusting for currency and portfolio changes.

Quarter Highlights

The company completed the acquisition of Monsanto in June 2018 for $63 billion, including debt. With this acquisition, Bayer now has the strongest portfolio of seed and crop protection products for a wide range of crops and indications, the best research and development platform and the leading digital farming business.

 The company reports in four segments — Pharmaceuticals, Consumer Health, Crop Science and Animal Health.

In the reported quarter, Crop Science sales were €6,444 million, up 125.2% from the year-ago quarter. At the Crop Science division, sales and earnings more than doubled due to the newly-acquired agriculture business. Bayer also benefited from service agreements, especially product supply and distribution agreements, with BASF in connection with the divested businesses. Sales were driven by growth in the Latin America and North America regions. Sales also increased slightly in the Europe, Middle East & Africa region.

Revenues at the Pharmaceuticals segment increased 5.3% to €4,354 million in the first quarter. Growth was backed by consistent strong performance of key products like Xarelto, Eylea, Xofigo, Stivarga and Adempas. Sales of Nexavar also increased in the quarter. However, sales of Betaferon /Betaseron, a multiple sclerosis treatment, decreased due to intense competition in the United States.

Consumer Health sales were down 1.4% year over year to €1,395 million in the first quarter. The business gained in Latin America and Asia-Pacific on a currency and portfolio-adjusted basis. However, sales declined in North America, Europe, and Middle East and Africa (EMEA). Bayer registered an 8.6% increase in sales in the Dermatology category, while business was down in the other categories, especially the Digestive Health (down 6%) and the Allergy & Cold categories.

Sales of Animal Health came in at $421 million, flat year over year. Business expanded in all regions except EMEA, while performance was flat year on year in Latin America. Business declined sharply in North America.

2019 Outlook

The company reaffirmed its outlook for 2019.

Sales are expected to be more than €46 billion, increasing about 4% on a currency and portfolio-adjusted basis.

Core earnings per share are expected to rise to about €6.80 on a currency-adjusted basis.

 

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise

 

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise | Bayer Aktiengesellschaft Quote

Zacks Rank & Other Stocks to Consider

Bayer currently is a Zacks Rank #2 (Buy) stock.

Some other top-ranked stocks are AstraZeneca PLC AZN, Bristol-Myers Squibb Company BMY and Eli Lilly and Company LLY, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AstraZeneca’s earnings per share estimates have increased from $1.73 to $1.78 for 2019 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, the average beat being 106.4%.

Bristol-Myers’ earnings per share estimates have increased from $4.77 to $4.85 for 2020 in the past 60 days. The company delivered a positive earnings surprise in the trailing four quarters, the average being 14.26%.

Lilly’s earnings per share estimates have increased from $5.60 to $5.66 for 2019 and from $6.42 to $6.63 for 2020 over the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, the average beat being 8.08%.

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