Bayer: Life cycle management in short and mid term, pipeline growth for the long term
BUY, Fair Value EUR98 (+16%)
Yesterday Bayer held a “Meet Management Conference” in London in order to provide the investment community with more qualitative details on its different activities, specifically on Pharma R&D projects. This meeting confirmed our positive opinion on the stock even though the meeting is not expected to impact our financial expectations in the short term. Thus at this stage we maintain our assumptions, i.e. an underestimation by the market both of revenue growth and long-term earnings in the Pharma franchise. The meeting highlighted the very nice progression of 5 newly launched drugs (Xarelto, Eylea, Xofigo, Stivarga and Adempas) but also to foresee the next step for pharma drug development in the second part of the decade. Even the Material Science division, although always impacted by the Chinese market and high raw material costs in the short term, presents profit growth drivers especially thanks to an efficiency programme. We maintain our Buy recommendation.
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