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Bayer (BAYRY) Beats on Q3 Earnings, Revenue Estimates

Bayer AG 's BAYRY third-quarter 2018 earnings per share was 87 cents, per American Depositary Receipt ("ADR"), which beat the Zacks Consensus Estimate of 41 cents.

On Sep 20, 2017, Bayer performed an ADR ratio change. With the new ratio, four Bayer ADRs correspond to one Bayer ordinary share. Third-quarter 2018 core earnings per share incorporate the effect of ADR ratio change. Core earnings per share were down 12.5% year over year to 35 cents from 40 cents, per ADR.

Total sales in the quarter were approximately $11.79 billion, up 32.3% from 8.90 billion in the year-ago quarter. Sales also beat the Zacks Consenus Estimate of $11.31 billion. While the company registered sales growth at Pharmaceuticals, business declined at Consumer Health and Animal Health. Sales at Crop Science increased compared with that in the year-ago quarter.

Year to date, shares of the company have lost 37.9% compared with the industry 's growth of 8.0%.

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

Quarter Highlights

The company completed the acquisition of Monsanto on Jun 7, 2018, for $63 billion, including debt. With the acquisition, Bayer now has the strongest portfolio of seed and crop protection products for a wide range of crops and indications, the best research and development platform and the leading digital farming business.

Bayer lost de facto control over the Covestro Group at the end of September 2017. As of Sep 30, 2017, there are four reporting segments - Pharmaceuticals, Consumer Health, Crop Science and Animal Health. As such, total figures for the four Life Science segments will no longer be presented separately.

Revenues at the Pharmaceuticals segment increased 2.4% to €4,163 million in the third quarter. Growth was backed by consistent strong performance of key products like Xarelto, Eylea, Xofigo, Stivarga and Adempas. Strongest sales growth among the other top Pharmaceuticals products was recorded for the diabetes treatment Glucobay, driven by expanded volumes in China.

However, sales of Adalat, Bayer's product to treat hypertension and coronary heart disease, decreased 6.4% as expanded volumes in China were not sufficient to compensate for declines in Japan and Canada.

Consumer Health sales were down 1.7% year over year to €1,297 million in the third quarter. However, on a currency and portfolio-adjusted basis, sales grew 3%. All regions contributed to growth, but Asia-Pacific delivered the strongest sales, with an increase of more than 9%.

In the reported quarter, Crop Science sales were €3,733 million, up 83.8% from the year-ago quarter. Sales included €2.2 billion from the acquisition of Monsanto and about €100 million from the businesses divested to BASF in August. Sales from the Animal Health segment came in at €304 million, down 15.3% from the year-ago quarter.

The segment recorded growth in the Asia-Pacific region on a currency- and portfolio-adjusted basis, while business was down year over year in other regions. Bayer registered sales growth for the Seresto flea and tick collar (3%) and the Baytril antibiotic (8.7%). However, sales of the Advantage line of flea, tick and worm control products declined 34.7% on a currency- and portfolio-adjusted basis, particularly in North America.

2018 Outlook

The company reaffirmed its outlook for 2018 to reflect the Monsanto acquisition.

Sales are expected to come in at more than €39 billion, corresponding to a mid-single-digit percentage increase on a currency- and portfolio-adjusted basis.

Core earnings per share are expected to be between €5.70 and €5.90. On a currency-adjusted basis, this corresponds to a high-single-digit percentage decline.

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise | Bayer Aktiengesellschaft Quote

Zacks Rank & Stocks to Consider

Bayer is a Zacks Rank #4 (Sell) stock.

Some top-ranked stocks worth considering are Bristol-Myers Squibb Co. BMY , Eli Lilly and Co. LLY and Merck & Co. Inc. MRK . While Bristol-Myers sports a Zacks Rank #1 (Strong Buy), Lilly and Merck carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Bristol-Myers' earnings per share estimates have increased from $3.59 to $3.84 for 2018 and from $3.83 to $4.07 for 2019 over the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 11.99%.

Lilly's earnings per share estimates have increased from $5.42 to $5.51 for 2018 and from $5.69 to $5.80 for 2019 over the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 10.03%. Shares of the company have increased 34.1% year to date.

Merck's earnings per share estimates have increased from $4.26 to $4.34 for 2018 and from $4.58 to $4.71 for 2019 over the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 3.96%. Shares of the company have increased 32.7% year to date.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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