Bayer AG BAYRY reported third-quarter 2024 core earnings of 7 cents per American Depositary Receipt (ADR), which missed the Zacks Consensus Estimate of 17 cents. The company reported earnings of 10 cents per ADR in the year-ago quarter.
Core earnings of €0.24 per share deteriorated 36.8% year over year due to impairment losses at the Crop Science division.
Total sales in the reported quarter were $10.9 billion (€9.9 billion), down 3.6% on a reported basis.
On a currency and portfolio-adjusted basis, sales increased 0.6% year over year.
Year to date, shares of Bayer have lost 30.1% against the industry’s growth of 11.6%.
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All growth rates mentioned below are on a year-over-year basis after adjusting for currency and portfolio changes.
BAYRY’s Q3 Results in Detail
Bayer reports under three segments, namely Crop Science, Pharmaceuticals and Consumer Health.
In the reported quarter, Crop Science sales decreased 3.6% to €4 billion. Within this segment, Herbicides business was down 11.5% due to volume declines for glyphosate-based products. This was mainly due to purchasing patterns normalizing in Latin and North America.
Fungicides sales were up 13.1% due to increased volumes in all regions. Corn Seed & Traits sales decreased 19.3% due to an overall acreage decline, primarily driven by Latin America. Sales from the Soybean Seed & Traits business declined 2.5% due to a weather-related delay to the start of the season in Latin America. The Insecticides business also grew 9.5%, driven by higher volumes in Latin America. The Vegetable Seeds business recorded encouraging gains that were largely driven by higher volumes and prices in Latin America.
BAYRY’s revenues in the Pharmaceuticals segment increased 2.3% to €4.5 billion. Nubeqa (for cancer) sales surged 83.2% to €417 million, recording gains in all regions and witnessing significant improvements in volumes, especially in the United States and EU. Kerendia sales surged 96.4%, mainly due to a substantial rise in volumes in the United States and business expansion in China.
However, sales of oral anticoagulant Xarelto, co-developed with J&J JNJ, decreased 23% to €802 million due to competitive pressure from generics, especially in Canada and Europe.
In the U.S. market, Xarelto is marketed by J&J. Bayer earns license revenues from JNJ for Xarelto sales in the United States.
Sales of the ophthalmology drug, Eylea, increased 8.6% to €848 million, driven by higher volumes in Europe and Japan as well as a one-time effect of reimbursement in the United Kingdom.
Please note that Bayer’s HealthCare unit co-develops Eylea with Regeneron REGN, which records net product sales of Eylea in the United States. BAYRY records net product sales of Eylea outside the country. REGN records its share of profits/losses in connection with the sales of Eylea outside the United States.
Consumer Health sales rose 5.7% to €1.4 billion, driven by increases in Dermatology (+7.4%) and Pain & Cardio (+10.9%) categories. Dermatology sales gained from continued strong demand for Bepanthen.
Nutritionals (+3.6%) and Allergy & Cold business (+3.1%) also boosted the Consumer Health business.
BAYRY Updates 2024 Guidance
Bayer reiterated its previously provided currency-adjusted guidance for 2024 for the total group. The company expects to generate sales in the range of €47-€49 billion.
However, in view of the weaker-than-anticipated development of the agricultural market, BAYRY revised its forecast for divisional sales. Business performance is below initial expectations at Crop Science and Consumer Health. Nonetheless, Pharmaceuticals division sales is likely to come in at the upper end of the revised guidance.
For the Crop Science Division, Bayer now expects currency and portfolio-adjusted sales growth to decline around 1% to 3% (previous forecast -1% to +3%). For the Pharmaceuticals Division, Bayer expects currency and portfolio-adjusted sales growth to be flat to grow 3% (previous forecast: down -4% to flat year over year). Consumer Health sales growth is projected to increase between 1% and 3% (previous forecast: 3-6%).
Bayer Aktiengesellschaft Price, Consensus and EPS Surprise
In September, BAYRY obtained received regulatory approval for the Eylea 8 mg pre-filled syringe in the European Union.
The company also filed a new drug application (NDA) with the FDA for a third indication for cancer drug Nubeqa (darolutamide) for its use in combination with androgen deprivation therapy (ADT) in patients with metastatic hormone-sensitive prostate cancer (mHSPC).
In October, BAYRY announced that the FDA had accepted the NDA for elinzanetant, an investigational compound for the non-hormonal treatment of moderate to severe vasomotor symptoms associated with menopause.
Our Take on BAYRY's Q3 Perfomance
Although Bayer’s earnings declined in the third quarter due to impairment losses at the Crop Science division, sales growth was encouraging at the Pharmaceutical division. New products, Nubeqa and Kerendia, retained their impressive momentum and offset the negative impact of a decline in Xarelto sales. Consumer Health business, too, posted growth. However, the Crop Science business was adversely impacted by significant declines in glyphosate-based herbicides.
The company is working to expand the labels of its key drugs, Nubeqa and Kerendia, which should boost growth.
Successful drug development is imperative for Bayer amid multiple challenges. The failure of a late-stage study on asundexian was a major setback for the company. BAYRY had earlier slashed dividends to conserve cash as increasing Roundup litigation charges adversely impacted the bottom line.
Bayer's Zacks Rank
BAYRY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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