U.S. Markets closed

Bayer (BAYRY) Q3 Earnings Beat Estimates, Sales Rise Y/Y

Zacks Equity Research

Bayer AG’s BAYRY third-quarter 2019 core earnings per share of 32 cents per American Depositary Receipt (“ADR”) increased 1.8% year over year. The figure excludes earnings from discontinued operations. Core earnings per ADR also beat the Zacks Consensus Estimate of 29 cents.

Total sales in the quarter were approximately $10.94 billion, up 1.6% from $10.77 billion in the year-ago quarter. The growth was driven by higher sales across segments namely Crop Science, Pharmaceuticals and Consumer Health divisions.

In August, the company entered into an agreement with Elanco to divest its Animal Health business. The company also agreed to sell its 60% stake in Germany-based site services provider, Currenta, to a company controlled by Macquarie Infrastructure and Real Assets in the same month. Bayer reported these two businesses under discontinued operations in the third quarter of 2019.

Shares of the company have risen 3.7% year to date compared with the industry’s increase of 1.6%.


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

Quarter Highlights

The company started reporting through three segments — Pharmaceuticals, Consumer Health and Crop Science — from the quarter under review.

In the reported quarter, Crop Science sales were €3,948 million, up 4.8% from the year-ago quarter on the back of growth in Latin and North America. Business at this segment has grown well amid challenging market environment. While sales of Fungicides, Corn Seed & Traits and Soybean Seed & Traits were strong during the quarter, segment revenues were hurt by decline in sales of Vegetable Seeds and other.

Please note that lawsuits against the company’s crop protection product, glyphosate, have increased during the quarter driven by higher advertising spend by the plaintiffs. However, the company believes it has meritorious defenses to fight these lawsuits.

Revenues at the Pharmaceuticals segment increased 5.9% to €4,504 million in the third quarter. Growth was backed by consistent strong performance of key products like Xarelto, Eylea, Avalox, Stivarga and Adempas. Strong growth momentum in China continued in this quarter. However, sales of Betaferon/Betaseron, a multiple sclerosis treatment, decreased due to intense competition in the United States. Please note that blood thinner drug, Xarelto, was developed in collaboration with J&J JNJ, while Regeneron Pharmaceuticals REGN commercializes eye drug, Eylea, in collaboration with Bayer in ex-U.S. markets.

Consumer Health sales were up 3.7% year over year to €1,288 million in the third quarter. The business gained in Europe/Middle East/Africa ("EMEA") and Latin America on currency and portfolio-adjusted basis. The Pain & Cardio category delivered the strongest performance, with sales increasing 9%. Sales were up in all categories, with Allergy & Cold up 6.4%, except Digestive Health category (down 7.5%).

2019 Guidance

The company updated its view for 2019 to exclude the sales and earnings contributions from Animal Health segment and Currenta. However, expected growth rates remained the same. Sales are expected to be €43.5 billion (previously €46 billion), increasing about 4% on currency and portfolio-adjusted basis.

Core earnings per share are expected to rise to €6.35 (previously €6.80) on a currency-adjusted basis. The guidance takes into account a decline of €0.35 per share due to portfolio measures and €0.10 per share due to currency effects.

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise


Bayer Aktiengesellschaft Price, Consensus and EPS Surprise

Bayer Aktiengesellschaft price-consensus-eps-surprise-chart | Bayer Aktiengesellschaft Quote

Zacks Rank & Stock to Consider

Bayer currently carries a Zacks Rank #4 (Sell).

GlaxoSmithKline plc GSK is a better-ranked pharma stock, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Glaxo’s earnings per share estimates have increased from $2.89 to $3.00 for 2019 and from $2.96 to $3.00 for 2020 in the past 60 days.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.

This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
GlaxoSmithKline plc (GSK) : Free Stock Analysis Report
Bayer Aktiengesellschaft (BAYRY) : Free Stock Analysis Report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Regeneron Pharmaceuticals, Inc. (REGN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research