UBS cuts price target on Bayer on weak outlook

Investing.com -  UBS cuts price target on Bayer AG NA (ETR:BAYGN )after the German pharmaceutical and agricultural giant posted mixed third-quarter results and issued downbeat earnings forecast for 2025.

Bayer’s pharmaceutical division is grappling with headwinds, including the erosion of revenues from its blood thinner Xarelto. While recent drug launches such as acoramadis and elinzanetant aim to fill the gap, analysts say they are not expected to offset the margin decline.

UBS cut sum-of-the-parts (SOTP) derived price target to €22 from €30.

The biggest adjustment came in the valuation of the seeds business, with its per-share contribution falling to €20.5 from €25.9, reflecting reduced sales expectations, lower trait income, and a weaker valuation multiple compared to peers. Analysts also raised Bayer’s conglomerate discount to 50% from 40%, citing continued uncertainty around free cash flow recovery and litigation risks.

Despite near-term challenges, analysts see some long-term promise in Bayer’s crop science business, particularly its short-stature corn, which has been well received in early markets. The pharma division’s newer drugs, including Nubeqa and Kerendia, continue to perform well, and the launch of a high-dose version of eye treatment Eylea is extending its franchise.

However, with Xarelto revenue erosion expected to persist for at least two years and a limited mid-term pipeline, analysts remain cautious.

Source: Investing.com