First, a few key figures on the third quarter of the pharmaceutical and agricultural group BAYER; in summary, we can speak of a good result that exceeded expectations. Group sales rose by +14.3% to EUR 9.8 billion (previous year: EUR 8.5 billion). All three divisions contributed to the excellent result. Significant volume and price increases were recorded by Crop Science. Sales also rose significantly in Pharmaceuticals. The new products and mostly successful trial programs are paying off. Even Consumer Health was able to expand growth in all regions and categories - despite an already strong prior quarter. EBITDA pre exceptionals increased by a very good +16.4% to EUR 2.09 billion. There should definitely be no doubt about BAYER's figures, outlook, potential, quality, power, know-how, etc.! Adjusted earnings per share, according to BAYER, should also be in the range of EUR 6.50 to EUR 6.70... this would currently result in a P/E ratio of a "ridiculous" 7.3x!
Unfortunately, the uncertain glyphosate lawsuits are still weighing on the share price, which inevitably leads - among analysts and investors - to thoughts of splitting up the BAYER Group. Without the "glyphosate lump", the share price would probably have long been in triple digits! However, the Supervisory Board as well as BAYER CEO Werner Baumann have already given a clear rejection to the split-up fantasies. While we do not believe that the management is drawing the wrong conclusions, the fact is that splits are rewarded by the majority on the stock market. Examples such as Siemens, the decision to split Daimler (into a car and truck division) and the announcements by General Electric or Johnson & Johnson confirm this. At BAYER, investors would then be of the opinion to separate the well-performing agricultural division from the rest. Werner Baumann, however, clearly states that the three main divisions (Pharma, Crop Science and Consumer Health) will continue to be managed under one roof. In our opinion, it would make most sense - subject to the glyphosate development - to consider a spin-off of the former Monsanto. This would separate this "lump" and BAYER could use the proceeds to reduce the debts accumulated due to the Monsanto takeover. According to our contacts in BAYER's investor relations, this option is interesting, but not feasible due to the pending lawsuits. Nevertheless, it seems that this option has already been considered.
Then this... and not necessarily just a side note: The DAX company BAYER and the software giant Microsoft are teaming up! With a strategic partnership, the two companies want to advance the digitalization of the food value chain. "We urgently need more innovation in this regard for food and textile fibers, due to global pandemics, unstable supply chains and climate crisis." This also clearly speaks for our price target of EUR 97!
BAYER is listed on the XETRA in Frankfurt under the symbol BAY, the security number is 10'367'293, last price approx. EUR 48.20.
