We are reverting to a Neutral recommendation on
) as we believe that all the positive news that led to our
previous Outperform recommendation on the stock are reflected in
the current price.
Bayer performed impressively in the third quarter of 2012,
driven by an increase in revenues. Bayer's earnings per share
during the third quarter of 2012 came in at €1.68 compared with
€1.12 in the year-ago period. The company recorded 11.5% growth
in revenues to €9,665 million. Growth was witnessed across all
the major divisions at Bayer.
Bayer continues to expect 2012 earnings to increase by 10%
year over year. Blood-thinner Xarelto, which has significant
commercial potential, performed well during the quarter. The
HealthCare unit of Bayer has co-developed Xarelto with
Johnson & Johnson
We are also impressed by the US approval of Stivarga for use
in treatment-experienced metastatic colorectal cancer patients.
Bayer is also looking to get Stivarga approved for treating
patients suffering from metastatic and/or unresectable
gastrointestinal stromal tumors (GIST). The US Food and Drug
Administration (FDA) is reviewing the marketing application
seeking approval of Stivarga for the GIST indication on a
priority basis. Bayer is also seeking Japanese approval of
Stivarga for the GIST indication. The sales potential of Stivarga
would be further boosted if the regulatory authorities clear the
drug for the GIST indication.
We are also positive on the European approval of eye-drug
Eylea for treating patients suffering from neovascular (wet)
age-related macular degeneration (wet AMD). Bayer is also seeking
to expand the label of Eylea into other eye disorders. The
HealthCare unit of Bayer has co-developed Eylea with
However, we are mindful of the regulatory/pipeline setbacks at
Bayer. In August 2012, Bayer and partner
) suffered a setback when the FDA issued a refuse-to-file letter
regarding the marketing application submitted in June 2012,
seeking approval to market Lemtrada for the treatment of
relapsing multiple sclerosis.
Apart from this regulatory setback, Bayer suffered a pipeline
setback in May 2012 when Nexavar (sorafenib), co-developed with
Onyx Pharmaceuticals Inc.
), failed to prolong the overall survival in patients suffering
from advanced non-squamous non-small cell lung cancer in a phase
Moreover, the generic threat looming over many of Bayer's key
products including the Yaz franchise (oral contraceptives) is
another challenge for the company.
BAYER A G -ADR (BAYRY): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
ONYX PHARMA INC (ONXX): Free Stock Analysis
REGENERON PHARM (REGN): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
To read this article on Zacks.com click here.