(Bloomberg) -- A reduced profit forecast failed to make a dent in Bayer AG shares, with the company attributing the revision to currency swings and analysts applauding first-quarter earnings that beat estimates. The stock gained slightly, with confirmation that the drugmaker aims to close its takeover of Monsanto Co. by the end of this quarter providing further reassurance.
The cut to guidance was small and has already been incorporated into estimates, most analysts said. Even though sales this year will drop below last year’s 35 billion euros ($42 billion) and earnings are set to decline by a low-single-digit percentage, core earnings per share are expected to remain at about the same level as last year.
Here’s a round-up of what analysts are saying.
Baader, Markus Mayer
(Buy, PT EU140)
Strong consensus beat in 1Q was driven by pharmaceuticals, which benefited from sales gains in key growth products and higher profitability in animal health.
Sees no need to change estimates after the company “slightly” decreased outlook as he expects the dollar to strengthen throughout the year. Core EPS guidance was confirmed despite the recent sale of new stock to Temasek, indicating significant positive bottom-line growth.
Expects capital raise to refinance the Monsanto deal “very soon,” which might be a positive share price trigger.
Berenberg, Alistair Campbell
(Hold, PT EU118)
Enough question marks, for example a weak consumer-health performance, to potentially put pressure on the shares.
Results were mixed as group sales missed expectations, while underlying Ebitda and core EPS beat consensus. In pharma, Xarelto and Eylea delivered as expected, but there were notable shortfalls in Xofigo, Stivarga, Nexavar and Betaferon. Crop sales were weak, but costs were also lower.
Jefferies, Ian Hilliker
(Buy, PT EU119)
The crop science revenue miss was due to poor weather in Europe and a tougher FX environment. In pharma, growth drivers Xarelto and Eylea beat expectations.
Group Ebitda was ahead of consensus as strong contributions from crop science and animal health more than offset a miss in consumer health. Consumer was impacted by supply interruptions and Chinese product reclassification.
Barclays, Emmanuel Papadakis
(Underweight, PT EU95)
1Q was “solid enough in our view, but the market will clearly have to wait a little longer to get clarity on Monsanto and the shape of 2019.”
Notes there was no further reference to Leverkusen site issues, which may mean that the impact will be capped at the EU300m guided at 4Q, though the evidence of continued OTC pressure is less reassuring.
No reference to the prior 2018 proforma guidance including Monsanto either, which guided to a “moderate” decline in core EPS in 2018 and an increase in the first full year.
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