Back to Neutral on Bayer - Analyst Blog
27 December 2012 - 12:15AM
Zacks
We are reverting to a Neutral
recommendation on Bayer (BAYRY) as we believe that
all the positive news that led to our previous Outperform
recommendation on the stock are reflected in the current price.
Bayer performed impressively in the
third quarter of 2012, driven by an increase in revenues. Bayer’s
earnings per share during the third quarter of 2012 came in at
€1.68 compared with €1.12 in the year-ago period. The company
recorded 11.5% growth in revenues to €9,665 million. Growth was
witnessed across all the major divisions at Bayer.
Bayer continues to expect 2012
earnings to increase by 10% year over year. Blood-thinner Xarelto,
which has significant commercial potential, performed well during
the quarter. The HealthCare unit of Bayer has co-developed Xarelto
with Johnson & Johnson (JNJ).
We are also impressed by the US
approval of Stivarga for use in treatment-experienced metastatic
colorectal cancer patients. Bayer is also looking to get Stivarga
approved for treating patients suffering from metastatic and/or
unresectable gastrointestinal stromal tumors (GIST). The US Food
and Drug Administration (FDA) is reviewing the marketing
application seeking approval of Stivarga for the GIST indication on
a priority basis. Bayer is also seeking Japanese approval of
Stivarga for the GIST indication. The sales potential of Stivarga
would be further boosted if the regulatory authorities clear the
drug for the GIST indication.
We are also positive on the
European approval of eye-drug Eylea for treating patients suffering
from neovascular (wet) age-related macular degeneration (wet AMD).
Bayer is also seeking to expand the label of Eylea into other eye
disorders. The HealthCare unit of Bayer has co-developed Eylea with
Regeneron Pharmaceuticals (REGN).
However, we are mindful of the
regulatory/pipeline setbacks at Bayer. In August 2012, Bayer and
partner Sanofi (SNY) suffered a setback when the
FDA issued a refuse-to-file letter regarding the marketing
application submitted in June 2012, seeking approval to market
Lemtrada for the treatment of relapsing multiple sclerosis.
Apart from this regulatory setback,
Bayer suffered a pipeline setback in May 2012 when Nexavar
(sorafenib), co-developed with Onyx Pharmaceuticals
Inc. (ONXX), failed to prolong the overall survival in
patients suffering from advanced non-squamous non-small cell lung
cancer in a phase III study.
Moreover, the generic threat
looming over many of Bayer’s key products including the Yaz
franchise (oral contraceptives) is another challenge for the
company.
BAYER A G -ADR (BAYRY): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
ONYX PHARMA INC (ONXX): Free Stock Analysis Report
REGENERON PHARM (REGN): Free Stock Analysis Report
SANOFI-AVENTIS (SNY): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Onyx Pharmaceuticals, Inc. (MM) (NASDAQ:ONXX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Onyx Pharmaceuticals, Inc. (MM) (NASDAQ:ONXX)
Historical Stock Chart
From Jul 2023 to Jul 2024