We also have two trendlines supporting the stock price at this point – the green dotted trendline and the orange dotted trendline in the chart. At least in Germany, the discussion about banning glyphosate is ongoing for years and despite the discussion it is still allowed in Germany. Hence, I would not be too sure that it will really be banned in a few years from now. But in case of Bayer (and as investor) we have to think about the possibility of a glyphosate ban and that Bayer might lose a bigger part of the €5 billion in annual revenue the product is generating right now. It is important the Bayer stays innovative to introduce new products to compensate the loss of glyphosate sales – if it should happen.
- When things reverse, and when the litigations settle, this business will no doubt go back up.
- The announcement of a new advisory committee focused on digital health technologies, including AI, augmented reality and digital therapeutics, suggests that the FDA is paying closer attention to this rapidly evolving field.
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- Taking the same growth rate (of 1%) as before and expecting the firm to solve its legal problems in the coming 10 years, I estimate the growth rate to be more in the region of 8%.
- In the United States, Bayer stock has been traded under a OTC Level l ADR Program since September 27, 2007.
While this may have helped somewhat boost slumping sales, it caused profit margins to fall. Added to its profitability troubles are a variety of factors, including a higher cost of shipping logistics. Because of all of this, Weber expects a loss in Q3 compared to a profit last year. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days.
But not only the chart is improving but Bayer also reported solid fiscal 2021 results at the beginning of March 2022. Sales increased from €41,400 million to €44,081 million – this resulted in a solid 6.5% year-over-year growth (FX and price adjusted sales increased even 8.9% YoY). Other information on the list included the people’s phone numbers, addresses and, reportedly, their leisure pursuits. This is likely illegal under European data protection law, and Bayer ended up suspending its work with the agency and apologizing for the list’s creation. On Tuesday, the Agence France-Presse (AFP) news agency said it had made a complaint to the country’s data protection authority, as four of its journalists were on the list. Bayer’s stock price hit an almost seven-year low Tuesday, in the wake of a third U.S. jury verdict that found its Roundup weedkiller to be a cause of people’s cancer.
EU executive proposes 10-year glyphosate approval extension
In June, the court decided that Monsanto’s infamous Roundup weed killer does indeed cause non-Hodgkin’s lymphoma. Because Bayer took over the company, they became responsible for the $10 million settlement, some of which is allocated for potential (yet likely) future cases. Almost all sectors have been negatively impacted by the coronavirus pandemic, but Bayer says the agricultural industry has taken a bigger hit than they presumed. With their already struggling Monsanto acquisition (the Bayer Crop Science Division), minimized demand for biofuel has made their progress weak.
- Consequently, it is much better to wait and see the outcome of these lawsuits.
- Bayer’s recent-term developments are problematic, and the trouble with roundup seems not to be over just yet – however, virtually all other sectors in the company are working well and delivering good results.
- Sales grew by 14.3% YoY, meaning that Bayer saw a continuing positive sales momentum, to nearly €10B for the quarter.
- If you however want to grow your money conservatively, safely, and harvest well-covered dividends while doing so, and your timeframe is 5-30 years, then I might be for you.
- And in my opinion, management is quite optimistic when it assumes to repay about €10 billion in debt in the next 12 months.
- When looking at the pharmaceutical segment, the biggest part of revenue is still stemming from Xarelto, which generated €1,164 million in sales (reflecting 10.1% growth YoY).
This is a hint, that people still trust Bayer und buy the products – despite the existence of cheaper generic products. Or when looking at the pharmaceutical segment, sales could increase from €13,512 million in 2014 to €17,962 million in 2019, which is resulting in an annual growth rate of 5.86%. In 2019, growth was driven by volume (+6%), which is a good sign, that more people were buying products from Bayer. We also have to mention, that sales in the second quarter declined – but in my opinion due to COVID1-19 (we will get to that) and not because of Bayer’s reputation.
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This hefty investment has yet to prove itself, and not just with the most recent alarm bells. Bayer has admitted to some agricultural shortcomings with their Monsanto takeover, causing stocks to fall.
Bayer investors angry over plummeting share price
This process has allowed me to triple my net worth in less than 7 years – and that is all I intend to continue doing (even if I don’t expect the same rates of return for the next few years). If the company doesn’t go into overvaluation, but hovers within a fair value, or goes back down to undervaluation, I buy more as time allows. Bayer’s management was already in hot water over the wisdom of the Monsanto interactive brokers review takeover, with shareholders having effectively told CEO Werner Baumann in a no-confidence vote last month that his job is in jeopardy. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Given the strength of the business, the stock should find a bottom soon, though 2023 has generally been a rough year for consumer discretionary stocks.
And finally, free cash flow is expected to be zero – compared to €3 billion in a previous guidance. Growth rates fluctuated heavy in the last decades and when looking at the 10-year EPS CAGR, we see numbers as high as 24% in the 1990s or almost 18% in 2014. When looking at a long-term average, we get a CAGR of 4.46% for earnings per share between 1980 and 2019, which seems to be in line with management’s growth expectations for the years to come. Of course, we sometimes have to assume growth will slow down, but the growth rates over the last few decades are often a good starting point for growth assumptions in the years to come.
Industry
Not only is the stock oversold at this point and could form a double bottom with the lows of March 2020. At the time of writing, the share price had recovered to €55.20, which is still down 2.25% on the day, and still down more than 44% since the merger’s closure. Bayer AG on Wednesday reported a rise in net profit despite slightly lower sales and backed its outlook for the year. The German pharmaceutical and chemical conglomerate posted net profit of 2.09 billion euros ($2.54 billi… When using these numbers from above and a 10% discount rate, we get an intrinsic value of €80.34 for Bayer. So far, we talked about the business – the positive and negative aspects of Bayer and the industry the company is operating in. But we all know we can’t just look at the business in isolation – we also must include the price we have to pay for a business in our analysis.
About Bayer AG (BAYGn.DE)
The major risk factor in investing in Bayer, as I would see it, is the Roundup litigation as well as the company’s pharma portfolio and how current or appealing the company can keep this going forward. Bayer’s recent-term developments are problematic, and the trouble with roundup seems not to be over just yet – however, virtually all other sectors in the company are working well and delivering good results. Bayer is in the midst a guide to forex day trading strategies of a transformation program expected to bring over €1.5B in cost savings, and the company is ahead of these plans. After 2024, Bayer is much more optimistic than the market and expecting sales to increase and the segment to return to sustainable growth. When looking at the pharmaceutical segment, the biggest part of revenue is still stemming from Xarelto, which generated €1,164 million in sales (reflecting 10.1% growth YoY).
For the pharmaceutical industry we also must point out that several companies are battling for market shares. While the short- to mid-term growth projections are slightly optimistic, we rather have to focus on long-term trends. As long-term investors, the performance over the next few years should not be ignored, but it becomes subordinate to the long-term growth expectations.
Consequently, it is much better to wait and see the outcome of these lawsuits. There are much better ways to invest in cheap healthcare stocks at the moment. Investors are afraid of buying Bayer stock mainly because of its disastrous $63 billion acquisition of Monsanto in 2018. Among many agricultural products, Monsanto trend trading strategies for dummies sells the world’s most popular and widespread herbicide, glyphosate (Roundup). In 2015, 45 years since glyphosate’s discovery, the International Agency for Research on Cancer (IARC) declared it to be a probable carcinogen. The ruling opened doors to a flood of litigation against Monsanto, for which Bayer is now liable.
Bayer: Still A Bargain Despite Ongoing Legal Challenges
All three segments are expected to grow in the low-to-mid single digits in the next few years. Until 2024, management is expecting crop sciences as well as consumer health to grow between 3% and 5% annually. The pharmaceutical segment is also expected to grow 3% to 5% annually until 2023, but for 2024, management is expecting a low-to-mid single-digit decline. It is a true value stock as it boasts a solid balance sheet, offering a P/B ratio of just 1.26.
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