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Bayer (BAYRY) to Report Q3 Earnings: What's in the Cards?

Bayer AG BAYRY is scheduled to release third-quarter 2020 results on Nov 3.

The company has an excellent track record, delivering an earnings beat in three of the trailing four quarters by 17.75%, on average.

Shares of the company have decreased 35.9% in the year so far compared with the industry’s decline of 0.6%.

Let’s see how things are shaping up for the quarter to be reported.

Factors at Play

The Bayer Group’s businesses turned in a solid performance in the second quarter of 2020 despite the COVID-19 pandemic and the associated uncertainties

The Crop Science sector registered growth while  sales at Pharmaceuticals and Consumer Health declined.

However, in September 2020, the company stated tha, due to the pandemic, the company’s Crop Science and Pharmaceuticals divisions generated lower revenues. We expect the trend to continue in the third quarter.

The Crop Sciencesector, is characterized by reduced growth expectations due to low commodity prices for major crops, intense competition in soy, and reduced biofuel consumption. This is compounded by negative currency effects, some of which are significant as in the case of the Brazilian Real. This situation is unlikely to improve considerably in the near-term.

The Consumer Health business has shown strong business in the third quarter and the trend is expected to continue.

In September 2020, the company stated that the COVID-19 pandemic led to headwinds in the 2020 fiscal year for Bayer, with significant currency effects presenting an additional burden on sales and earnings growth. The company therefore confirmed its adjusted outlook for 2020. For 2020, the company expects currency-adjusted growth in sales between €43 billion and €44 billion. Core earnings per share are expected between €6.70 and €6.90 on a currency-adjusted basis.

In October 2020, Bayer’s development partner, Janssen Research & Development, LLC, a subsidiary of Johnson and Johnson JNJ a submitted a supplemental New Drug Application (sNDA) to the FDA for a new indication to expand the use of Xarelto (rivaroxaban) in people with peripheral artery disease (PAD) to include those after recent lower- extremity revascularization due to symptomatic PAD.The company is expected to provide updates on the same in the third quarter.

Moreover, investors will be keen to know if the coronavirus pandemic has affected the demand for other marketed drugs and those in clinical studies.

RECENT DEVELOPMENTS

In October 2020, the company acquired AsklepiosBioPharmaceutical, Inc. (AskBio), a US-headquartered biopharmaceutical company specialized in the research, development and manufacturing of gene therapies across different therapeutic areas. Through the acquisition, Bayer will add an industry-leading adeno-associated virus (AAV)-based gene therapy platform to its portfolio, which has already demonstrated applicability across different therapeutic areas. It also includes a state-of-the-art gene therapy technology platform as well as existing gene therapy manufacturing platform. We expect the company to provide an update on this in the third quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Bayer this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here as you will see below.

Earnings ESP: Bayer has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks That Warrant a Look

Here are some biotech stocks with the right mix of elements to beat on earnings this time around:

Alkermes Plc. ALKS )has an Earnings ESP of +142.86% and a Zacks Rank #3.

Alnylam (ALNY) has an Earnings ESP of +4.23% and a Zacks Rank #3.  

 

Bayer Aktiengesellschaft Price and Consensus

Bayer Aktiengesellschaft Price and Consensus

Bayer Aktiengesellschaft price-consensus-chart | Bayer Aktiengesellschaft Quote

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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.

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