Bayer AG BAYRY released first-quarter 2023 core earnings of 79 cents per American Depositary Receipt (“ADR”), which beat both the Zacks Consensus Estimate and our model estimate of 55 cents. The company reported earnings of 99 cents per ADR in the year-ago quarter.
However, total sales in the first quarter were $15.4 billion, missing the Zacks Consensus Estimate of $15.7 billion but beating our model estimate of $15 billion. Revenues were down from $16.4 billion reported in the year-ago quarter.
Shares of Bayer have gained 24.8% in the year so far compared with the industry’s growth of 3.2%.
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All growth rates mentioned below are on a year-over-year basis after adjusting for currency and portfolio changes.
Quarter in Detail
Bayer reports under three segments, namely Crop Science, Pharmaceuticals and Consumer Health.
Crop Science sales were €8.3 billion, down 1.1% from the year-ago quarter, as sales increases in the Europe/Middle East/Africa and Asia/Pacific regions were offset by declining sales in Latin and North America on lower volumes.
Sales of Corn Seed & Traits were up 15.8% year over year to €3.3 billion, driven by higher prices in the North America and Europe/Middle East/Africa regions. However, the herbicides business declined 24.3% to €1.9 billion due to lower volumes and prices for glyphosate-based products. Sales of Fungicides were down 0.2% as higher prices in all regions offset lower volumes in Latin and North America in particular. Sales of Soybean Seed & Traits were up 1.4% year over year to €608 million.
Revenues in the Pharmaceuticals segment were down 3.1% year over year to €4.4 billion in the reported quarter due to tender procedures in China, especially for oral anticoagulant Xarelto and Adalat. Sales in China were also impacted by the pandemic-related developments. Xarelto decreased 12.8% to €943 million.
The oncology drug Nubeqa increased 130.7% on significant volume increases in the United States and Europe. Ophthalmology drug Eylea sales rose 4.5% to €789 million despite declining prices. Kerendia (chronic kidney disease associated with type 2 diabetes) sales gained on its successful market launch in the United States.
Please note that Bayer’s HealthCare unit co-develops Eylea with Regeneron REGN. Regeneron records net product sales of Eylea in the United States. Bayer records net product sales of Eylea outside the United States. REGN records its share of profits/losses in connection with sales of Eylea outside the United States. Bayer co-develops Xarelto with J&J.
Consumer Health sales rose 4.1% year over year to €1.57 billion, as growth slowed by temporary supply constraints. Sales of cough, cold and allergy products gained 15.9% due to continuously elevated cold incidence rates and contributions from the launch of Astepro antihistamine nasal spray in the United States. Dermatology sales increased 10.3% to €345 million, driven by continued strong demand for Bepanthen. Sales in the Nutritionals category declined 10%.
Bayer Aktiengesellschaft Price, Consensus and EPS Surprise
Bayer Aktiengesellschaft price-consensus-eps-surprise-chart | Bayer Aktiengesellschaft Quote
2023 Guidance Maintained
For 2023, the company expects to generate currency-adjusted sales of €51-€52 billion. Core earnings per share are projected at €7.20-€7.40 on a currency-adjusted basis.
However, the company expects potential risks arising from the significantly reduced market price expectations for glyphosate-based products within its Crop Science Division and anticipates target attainment to come in at the lower end of the guidance. Bayer earlier guided for sales growth of 3% at Crop Science, 1% at Pharmaceuticals and 5% at Consumer Health (after adjusting for currency and portfolio changes).
Zacks Rank & Stock to Consider
Bayer currently carries a Zacks Rank #4 (Sell).
A couple of stock worth considering in the large-cap pharma sector are Novo Nordisk NVO and Novartis NVS. Novo sports a Zacks Rank #1 (Strong Buy) and Novartis carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for NVO in fiscal 2023 moved up 45 cents to $4.96 in the last 30 days. Nordisk surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 0.35%.
Novartis’ earnings estimates for 2023 rose 9 cents to $6.66 in the last 30 days. NVS surpassed estimates in all of the trailing four quarters, the average surprise being 5.15%.
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