Bayer (BAYRY) Q2 Earnings & Sales Fall Y/Y, Guidance Tweaked

Bayer AG’s BAYRY second-quarter 2020 core earnings per share of 44 cents per American Depositary Receipt ("ADR") decreased from 46 cents reported in the year-ago quarter.

Total sales in the quarter were $11.1 billion, down from $13.3 billion in the year-ago quarter.

Shares of the company have decreased 14.3% so far this year against the industry’s 0.7% growth.

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

Quarter Highlights

The company started reporting under three segments — Pharmaceuticals, Consumer Health and Crop Science — from the fourth quarter of 2019. Please note that the company had announced divestment of its Animal Health business to Elanco in 2019 and reports the segment under discontinued operation.

In the reported quarter, Crop Science sales were €4,802 million, up 3.2% from the year-ago quarter. While sales of Fungicides, Corn Seed &Traits, Herbicides, Insecticide,Soybean Seeds & Traits and Environmental Science were strong during the quarter, segment revenues were hurt by a decline in sales of Vegetable Seeds and in North America, where business was adversely impacted by shifts in demand due to the COVID-19 pandemic.

Revenues at the Pharmaceuticals segment decreased 8.8% to €3,992 million in the second quarter. The contact restrictions and protective measures being implemented worldwide due to the COVID-19 pandemic led to a drop in elective treatments in doctors’ offices and hospitals, with some treatments being postponed. This particularly affected women’s health, ophthalmology and radiology products.

However, there was a slight recovery trend toward the end of the second quarter. Sales increased owing to the solid performance ofblood thinner drug, Xarelto, which the company co-developed with J&J JNJ. Sales of the diabetes treatment Glucobay, fell 73.8%, mainly due to the implementation of the volume-based procurement policy in China and Japan. The pandemic also led to a drop in sales of Mirena /Kyleena /Jaydess intrauterine systems.

Consumer Health sales were down1.9% year over year to €1,201 million in the second quarter, primarily due to quarantine and protective measures introduced in various regions leading to less in-store retail traffic.The Nutritionals category saw the largest increase and the Allergy & Cold category the largest decrease.

2020 Guidance

The financial impact of the COVID-19 pandemic remains difficult to predict. Bayer, thus,adjusted the forecast issued in February 2020.

The company now expects currency-adjusted growth in sales between €43 billion and €44 billion, changed from its previous expectation of €44 - €45 billion.

Core earnings per share are now expected between €6.70 and €6.90 compared with the previous expectation of €7.00 and €7.20 on a currency-adjusted basis.

Zacks Rank & Other Stock to Consider

Bayer currently carries a Zacks Rank #2 (Buy).

Some other similar-ranked stocks in the healthcare space are GlaxoSmithKline plc GSK and Roche Holding AG RHHBY. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GlaxoSmithKline’searnings per share estimates have moved up for 2020 from $2.94 to $2.98in the past 60 days.

Roche’searnings per share estimates have moved up from $2.60 to $2.63 for 2020 and from $2.77 to $2.81 for 2021 in the past 60 days.

Bayer Aktiengesellschaft Price, Consensus and EPS Surprise

Bayer Aktiengesellschaft price-consensus-eps-surprise-chart | Bayer Aktiengesellschaft Quote

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