Fundamental analysis
Bayer is a German multinational biotechnology and pharmaceutical company. Founded in 1863, it is now headquartered in Leverkusen.
The company developed the drug Aspirin. It is listed by the WHO as a basic medicine. Its sales are still high worldwide.
Bayer’s stock is part of the German DAX index and the European EURO STOXX 50.
The company is betting on the following trends in the consumer goods and pharmaceuticals sector until 2050:
– The 60+ population will double.
– Up to 2.2 billion more people will be added
– The need for food will increase by up to 50%
The company is adapting its long-term strategy and focus to this.
The company owns the Bayer 04 Leverkusen football club.
Bayer pays a stable dividend once a year, as is customary for European companies.
Results
The quarterly results were as expected:
Group turnover was EUR 13.8 billion.
EBITDA fell to EUR 4.4 billion.
Sales were down in Crop science and Consumer health, while turnover grew in Pharmaceuticals.
The main income in the Pharmaceuticals section is from cardiovascular drugs. Especially Xarelto, which is a long-term medication.
Net income amounted to EUR 2 billion.
The number of employees fell below 100 000.
Technical analysis
The stock is in a downtrend. The moving averages crossed basically a year ago, in July 2023. Since then, the share price has been declining. However, the spread is narrowing. The stock has been above support at 25 euros per share for more than two months. It is holding solidly, even though it has been tested several times.
With this trend and the support holding, the moving averages may cross again in the near future.
It has lost 50% of its value over the past year.
The RSI has been in the neutral zone for more than two months.
Volume has been elevated in recent months.
Conclusion
Bayer is one of the defensive companies that build its value over the long term. However, even then, it cannot be overlooked that they are not completely successful. A 50% drop in share value is not exactly an optimal outcome.
Support at the price of 25 Euro per share still holds. The economic results are not getting better, but they are not getting worse either. So if support holds and there is a crossing of the moving averages into growth, the stock could rise. But if support is broken, the share price could fall further.