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Stock Watch: Bayer’s Movable Goalposts

Lowered Full-Year Guidance Met After November’s Revision

 
• By Andy Smith

After lowering its full-year earnings guidance just six weeks before the end of 2024, Bayer, by talking up of the prospects for its new drug launches and a major clinical trial result in 2025, might risk damaging its integrity further.

Stock Watch Image, Andy Smith
ANDY SMITH OFFERS A LIFE SCIENCE INVESTOR'S PERSPECTIVE ON BIOPHARMA BUSINESS
Key Takeaways

Bayer’s fourth-quarter sales fell by over 1% on the same quarter of 2023 while its stock price rose by up to 6% on the announcement.

 

The prospects for its new drug launches in 2025 likely contributed to investors’ warm reception although its full-year 2025 revenue guidance was for a modest decline.

 

Having limped away wounded from a failed study of its experimental anticoagulant asundexian in 2023, Bayer has another chance to redeem itself in 2025.

 

Of all the stock price reactions in the fourth-quarter 2024 earnings season, the last – that of Bayer – was the most perplexing. Bayer’s stock price opened up in Frankfurt by 6% and closed the day up by over 4% compared with a gain of just over 1% for the NYSE Arca Pharmaceutical Index (DRG). In previews of Bayer’s results, the analysts at UBS suggested that its Crop Science division would be key, while those from J.P. Morgan expected “better Pharma results

This was partly because Bayer’s fourth-quarter group sales fell by just over 1% on the fourth quarter of 2023, but grew by 18% on a typical seasonally weak third quarter to beat analysts’ pessimistic estimates by 4%. Sometimes analysts and investors expect the worst from a quarterly report and are pleasantly surprised by an announcement that is not as bad as feared. This started to look the case with Bayer’s fourth-quarter results

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