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We issued an updated report on Bayer Aktiengesellschaft (BAYRY - Free Report) on Sep 21.

Notably, Bayer is a life science company with core competencies in the areas of health care and agriculture. The company reports results under five divisions – Pharmaceuticals, Consumer Health, Crop Science, Animal Health and Covestro.

The company has a robust pipeline ranging from phase I to phase III development. Interesting late-stage candidates include BAY 1841788 (ODM-201, AR antagonist; non-metastatic castration-resistant prostate cancer), BAY 1841788 (ODM-201, AR antagonist; metastatic hormone-sensitive prostate cancer), copanlisib (PI3K inhibitor; various forms of non-Hodgkin lymphoma) and finerenone (MR antagonist; diabetic kidney disease) among others.

Bayer’s shares have outperformed the industry year to date. The stock has been up 26.8% compared with the industry’s gain of 16.6% in the same time frame.

 

In September 2017, the FDA approved copanlisib under the brand name Aliqopa 60 mg vial for injection to treat adult patients with relapsed follicular lymphoma who have received at least two prior systemic therapies.
Meanwhile, Bayer is looking for a label expansion of its oncology drug Stivarga, which is approved for the treatment of metastatic colorectal cancer and metastatic gastrointestinal stromal tumors. The drug was granted marketing authorization by the European Commission (EC) in Aug 2017, for the treatment of adult patients with hepatocellular carcinoma (HCC) who have been previously treated with Nexavar (sorafenib).

Also, the company announced the submission of a Biologics License Application (BLA) with FDA for its long-acting site-specifically PEGylated recombinant human Factor VIII (BAY94-9027) for the treatment of Hemophilia A in August.

In fact, Bayer has made several acquisitions and entered into a number of deals to boost its portfolio in the past few quarters. It is planning to acquire Monsanto Company (MON - Free Report) in an all-cash transaction worth approximately $66 billion as well.

Going forward, the combined business is expected to boost Bayer’s Crop Science business and provide accretion to its core earnings from the first full year of the closing of the transaction (slated to close by the end of 2017), followed by double-digit percentage growth.

Furthermore, Bayer expects annual earnings contributions of around $1.5 billion from synergies after three years of closing the transaction as well as additional future benefits from integrated offerings. Markedly, we believe that the proposed Monsanto acquisition is a strategic move which will offer Bayer with a broad set of solutions to meet farmers’ current and future needs.

However, the company is facing generic threats/competition for many of its products including the Yaz franchise (oral contraceptives). The genericization of key drugs might negatively impact revenues.

 

Bayer AG Price and Consensus

 

Bayer AG Price and Consensus | Bayer AG Quote

Zacks Rank & Other Stocks to Consider

Bayer currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in health care sector include Alexion Pharmaceuticals, Inc. (ALXN - Free Report) and Regeneron Pharmaceuticals, Inc. (REGN - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alexion Pharmaceuticals’ earnings per share estimates have moved up from $5.32 to $5.60 for 2017 and from $6.56 to $7.06 for 2018 over the last 60 days. The company delivered positive earnings surprises in all the trailing four quarters, with an average beat of 11.12%. The share price of the company has increased 16.9% year to date.

Regeneron’s earnings per share estimates have increased from $12.84 to $14.99 for 2017 and from $15.32 to $16.64 for 2018 over the last 60 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 10.11%. The share price of the company has increased 18.1% year to date.

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