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Bayer AG

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Bayer missed earnings expectations but exceeded the revenues estimates in the fourth quarter of 2016. We are concerned about Bayer’s dependence on the Pharmaceuticals segment for growth. Below-par sales at this segment may weigh heavily on the stock. The company has been facing generic threats for many of its products. Moreover, continued weak performance of key drugs could impact the company’s top line. Bayer however has a positive record of earnings surprises in recent quarters. Nevertheless, Bayer’s Life Science businesses continue to perform well, particularly Pharmaceuticals. In its attempt to create a global leader in agriculture, Bayer is looking to acquire Monsanto in a deal worth about $66 billion. Bayer’s shares have outperformed the Large Cap Pharma industry year to date.

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