) earnings during the first quarter of 2014 came in at €1.95 per
share (roughly $2.67 per share) compared with €1.70 per share
(approximately $2.25 per share) in the year-ago period. Earnings
benefited from higher revenues. Bayer's shares gained around 3.4%
following the first-quarter results.
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Bayer's first-quarter revenues of €10.6 billion were up 2.8% year
over year. Revenues during the quarter were boosted by recently
launched pharmaceutical products. Revenues from all the three
major segments at Bayer - Crop Science, HealthCare and Material
Science - improved during the quarter. Revenues from these
segments increased a respective 4.9%, 2.9% and 1.0% year over
Segmental Performance in the Quarter
HealthCare, Crop Science and Material Science accounted for
approximately 43.3%, 27.5% and 26.6% of total revenues,
respectively, during the first quarter of 2014.
The HealthCare segment recorded revenues of €4.6 billion in the
reported quarter. Revenues from the Pharmaceuticals (adjusted
growth of 14.9%) sub-segment saw year-over-year improvement,
however, the Consumer Health sub-segment remained flat year over
Sales of new products like Xarelto (anticoagulant), Eylea (eye
drug), Xofigo (oncology), Adempas (pulmonary hypertension) and
Stivarga (oncology) boosted the Pharmaceuticals segment. These
recently launched products contributed around €600 million to
The Crop Science division, which is engaged in developing and
marketing chemical crop protection products (insecticides,
herbicides, and fungicides), seeds and integrated plant
biotechnology solutions for agricultural and non-agricultural
uses, recorded sales of €2.9 billion in the first quarter of
2014. The segment exhibited solid growth particularly in Latin
America, Africa and the Middle East, along with Asia/Pacific.
The Material Science segment, one of the world's largest polymer
manufacturers, posted sales of €2.8 billion in the reported
quarter. The segment exhibited growth in all of its business
units apart from regions like Latin America, Africa and the
Bayer Reaffirms 2014 Outlook
Bayer expects 2014 sales to be around €41−€42 billion, an
increase of 5% on an adjusted basis from the 2013 figure. The
company's core earnings are expected to grow in the
mid-single-digit percentage range.
Revenues from the HealthCare segment are expected to come in
around €19.5−€20 billion (mid-single-digit percentage growth).
Bayer still expects the Pharmaceuticals sub-segment to exhibit
high-single-digit sales growth in 2014, primarily due to its
recent encouraging performance. The newly launched products at
Bayer are expected to contribute around €2.8 billion to segmental
sales in 2014.
The company still expects Consumer Health sales to exhibit
low-to-mid, single-digit sales growth in 2014. Sales from the
Crop Science segment are expected to grow in the mid- to
high-single-digit percentage range. The company still believes
that its Material Science segment will make a turnaround this
year with sales growing in the mid-single-digit percentage range.
Bayer's results in the first quarter were encouraging. We are
impressed by the performance of the newly launched products at
Bayer during the quarter. These products are expected to perform
well in the coming quarters as well. The company made significant
progress on its pipeline as well. Moreover, the company's 2014
outlook looks promising.
Bayer presently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks include
Alexion Pharmaceuticals, Inc.
Johnson & Johnson
). While Alexion carries a Zacks Rank #1 (Strong Buy), Allergan
and Johnson & Johnson carry a Zacks Rank #2 (Buy).