Bayer Shares Drop Post Q3 Results

Shares of Bayer (ETR:BAYGN) fell over 11% on Tuesday following disappointing Q3 results and a reduction in the company’s EBITDA guidance for the full year.

Bayer reported a "clean" EBITDA of €1.25 billion for the quarter, about 10% below consensus estimates of €1.386 billion, largely due to underperformance in the Pharma division.

Crop Science, which was expected to post weak numbers, also struggled, adding to the challenges.

Analysts at Stifel noted that the latest report underscored ongoing pressure within Bayer’s agricultural business and signaled cautious expectations for the agricultural market in 2025.

In light of the results, Bayer revised down its full-year EBITDA guidance, now targeting €10.4-10.7 billion, a reduction from previous guidance of €10.7-11.3 billion.

The company has attributed part of this reduction to stronger-than-anticipated foreign exchange headwinds. The new forecast indicates Bayer will need to deliver €2.6 billion in Q4 EBITDA to hit this revised range, above the €2.4 billion consensus estimate.

Crop Science continued to post weak numbers in Q3, the lowest-performing period for the division.

The division's performance was driven by a significant decline in glyphosate sales, down 19% year-on-year due to lower volumes, even though non-glyphosate crop protection sales rose 9%.

Price pressures remain an issue in crop protection overall, while Bayer also reported a 10% organic sales decline in its seed business, which analysts noted mirrored similar results at industry peer Corteva (NYSE:CTVA).

Additionally, Bayer lowered its 2024 sales growth guidance for Crop Science to a range of -3% to -1% from its previous guidance of -1% to +3% and reduced its EBITDA margin forecast to 18-20%, down from 20-22%. An additional €3.8 billion impairment at Crop Science compounded the negative results for the segment.

Pharma, a higher-margin division within Bayer, reported modest 2% organic sales growth for the quarter, driven by strong performance from Nubeqa and Kerendia.

Sales of Xarelto, however, fell sharply by 23% year-on-year, though Stifel pointed out that revenue from newer drugs helped offset some of this decline.

Eylea showed growth of 9%, supported by the launch of an 8mg formulation, while Kerendia nearly doubled its sales year-on-year.

Bayer expects full-year Pharma sales growth to reach the upper end of its forecast range of 0% to +3%.

However, the Pharma division’s Q3 EBITDA margin fell to 24%, raising concerns over sustaining profitability, as the decline in high-margin Xarelto sales exerts downward pressure.

Year-to-date, the division's EBITDA margin sits at 27%, within reach of Bayer’s full-year target range of 26-29%.

Consumer Health, a smaller division within Bayer, reported 6% organic sales growth in Q3, primarily due to a 5% increase in prices.

Stifel analysts noted that after this quarter’s solid performance, Consumer Health is on track to meet its full-year EBITDA margin goal of 23-24%, currently at 23.4% year-to-date.