Bayer: Time for a break
NEUTRAL vs. BUY, Fair Value EUR82 vs. EUR75 (+2%)
Yesterday, Bayer revealed a below-than-consensus first quarter mainly due to a disappointment for the Material Sciences franchise and for mature product sales. Thus we move our estimates on sales and EBITDA for the year to adjust for the “new guidance” of the company, i.e. flat EBITDA vs last year (vs a slight increase). Also we apply a new valuation model for the stock represented by the average between a global DCF valuation, the EVA method and a SOTP method. Thus we achieve a FV of EUR82 vs EUR75 previously. Considering the good performance over the last few months driven by a very impressive R&D result flow and now a lack of significant newsflow in short term, we downgrade the stock to NEUTRAL.
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