reports
- Damien Conover
Trump’s Blueprint to Lower Drug Prices Offers Minor Changes; No Big ...
The Trump administration’s policy paper titled “The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs†offers proposals that don’t impact our moat ratings in the Big Pharma and Biotech industries, and the pricing power of branded drugs in the U.S. still looks strong. The blueprint’s near-term focus largely supports increasing generic drug competition, slightly strengthening Medicare drug price negotiations, improving drug price transparency, and providi...
- Damien Conover
Trump’s Drug Plan Looks to Modestly Lower Drug Prices, Keeping Big P...
Trump’s policy speech on lowering drug prices didn’t offer many specifics and focused mostly on reducing middleman profits and raising drug prices overseas. Based on the 2019 U.S. government budget proposal and the Council of Economic Advisors white paper on drug policy, we expect only modest negative headwinds to branded drug prices. We continue to view moats within Big Pharma/Biotech industries as intact, supported by strong pricing power for patent protected drugs. We view the branded dru...
- Damien Conover
Monsanto Announces Senior Leadership Changes to Go Into Effect After B...
Monsanto announced that Chairman and Chief Executive Officer Hugh Grant will be stepping down after Bayer’s proposed acquisition of the company closes. Grant, who has worked for Monsanto for over 35 years, has been chairman and CEO since 2003. While details about the timing of the Bayer transaction were not provided, Monsanto said Bayer continues to target closing the deal during the second calendar quarter of 2018, which is consistent with our view that the acquisition will close by the end o...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gro...
Bayer reported first-quarter results slightly below our expectations. We plan to slightly lower our fair value estimate based on the results, but we still view the stock as undervalued. While the pharmaceutical division continues to post strong gains from leading drugs Xarelto for cardiovascular disease and Eylea for eye care, the consumer division posted weak results in emerging markets. Nevertheless, the company’s steady overall growth in the healthcare and crop science divisions supports ou...
- Damien Conover
Bayer Posts Slightly Disappointing 1Q, but Shares Still Look Undervalu...
Bayer reported first-quarter results slightly below our expectations. We plan to slightly lower our fair value estimate based on the results, but we still view the stock as undervalued. While the pharmaceutical division continues to post strong gains from leading drugs Xarelto for cardiovascular disease and Eylea for eye care, the consumer division posted weak results in emerging markets. Nevertheless, the company’s steady overall growth in the healthcare and crop science divisions supports ou...
- Damien Conover
Bayer-Monsanto Deal Should Receive Final Regulatory Approval in May an...
On April 26, reports indicated that Bayer’s proposed acquisition of Monsanto is on track to receive U.S. Justice Department regulatory approval by the end of May. The approval is the last major regulatory hurdle before the deal can close. Assuming approval is completed by the end of May, we think the deal will likely close by the end of June, which is in line with Bayer management’s most recent timeline. Having already assumed a 100% probability that the deal will close, we maintain our $128...
- Damien Conover
Bayer’s Acquisition of Monsanto Receives U.S. Justice Department App...
On April 9, The Wall Street Journal announced that the U.S. Justice Department has approved Bayer’s proposed acquisition of Monsanto. The U.S. was the last major regulatory approval that the companies needed to finalize the deal. We expect the deal to close within the next few months, and as such, we increase our probability that the deal will close as planned to 100% from 75%. The market reacted positively to the news, sending Monsanto shares up nearly 7% to $125.66 at the time of writing. Ou...
- Damien Conover
U.S. Regulators Want Additional Divestitures, but Bayer-Monsanto Deal ...
On March 15, Bloomberg reported that the U.S. Justice Department’s antitrust division wants further divestitures from either Bayer or Monsanto before approving the merger. The market reacted negatively to the news, sending Monsanto’s share price down roughly 4% to $118 per share, and Bayer shares were down nearly 1% to EUR 95 per share at the time of writing. While some additional divestitures will likely be required, we ultimately think Bayer and Monsanto will be able to work out a deal to ...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gro...
Bayer reported third-quarter results largely in line with both our and consensus expectations as slight weakness on the top line was offset by expense controls. We don’t anticipate any major changes to our fair value estimate based on the results. Additionally, Bayer’s acquisition of Monsanto remains on track to close in early 2018, and we assign a 75% probability that the deal will close following expected approvals from antitrust regulators. The recent deal with BASF to divest select crop ...
- Damien Conover
Bayer Posts Slowing Sales Growth in 3Q, but Growth Should Accelerate I...
Bayer reported third-quarter results largely in line with both our and consensus expectations as slight weakness on the top line was offset by expense controls. We don’t anticipate any major changes to our fair value estimate based on the results. Additionally, Bayer’s acquisition of Monsanto remains on track to close in early 2018, and we assign a 75% probability that the deal will close following expected approvals from antitrust regulators. The recent deal with BASF to divest select crop ...
- Damien Conover
Monsanto-Bayer Deal One Step Closer to Completion After Bayer Agrees t...
Bayer agreed to sell select crop science businesses to BASF for EUR 5.9 billion in a deal that is likely to satisfy regulator’s concerns regarding Bayer’s proposed acquisition of Monsanto. The crop science businesses that Bayer will divest include a portion of the LibertyLink genetically modified (GM) platform as well as some seeds and crop chemicals assets. Since the acquisition was announced in September 2016, we have expected Bayer would need to divest some seeds assets as a condition to ...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gro...
Bayer reported excellent cardiovascular data for Xarelto, and we are increasing our peak sales for the drug (as reported by Bayer) by EUR 2.5 billion to EUR 7.9 billion, which increases our Bayer fair value estimate by 5%. We continue to view the stock as undervalued. Also, while the news is positive for Johnson & Johnson, which holds partial rights to the drug in the U.S., the higher peak sales number doesn’t materially alter our fair value estimate for that firm. However, for both firms, t...
- Damien Conover
Bayer Posts Strong Xarelto Data, Leading to an Increase in Fair Value ...
Bayer reported excellent cardiovascular data for Xarelto, and we are increasing our peak sales for the drug (as reported by Bayer) by EUR 2.5 billion to EUR 7.9 billion, which increases our Bayer fair value estimate by 5%. We continue to view the stock as undervalued. Also, while the news is positive for Johnson & Johnson, which holds partial rights to the drug in the U.S., the higher peak sales number doesn’t materially alter our fair value estimate for that firm. However, for both firms, t...
- Damien Conover
Despite Longer EU Commission Review, We Don’t Anticipate Major Chang...
The European Commission announced that it has opened an investigation into Bayer’s proposed acquisition of Monsanto that will focus on product overlap (and the subsequent market share increases from the deal). We don't expect the investigation to be completed before the end of the year. Although we have adjusted our expected deal closing timeline to the middle of 2018 from early 2018, we still assign roughly a three fourths probability that the deal will close as expected. We make no changes t...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gro...
Bayer reported second-quarter results slightly below our expectations, but we don’t expect any major cuts to our fair value estimate based on the minor underperformance, and we continue to view shares as slightly undervalued. Further, Bayer remains on solid footing with its narrow moat, and the expected completion of the Monsanto acquisition later in 2017 should further strengthen the company’s competitive positioning. In the quarter, strong drug sales helped offset weakness in Bayer's other...
- Damien Conover
Bayer Posts Weak 2Q, Dragged Down by Crop and Consumer, But Shares Loo...
Bayer reported second-quarter results slightly below our expectations, but we don’t expect any major cuts to our fair value estimate based on the minor underperformance, and we continue to view shares as slightly undervalued. Further, Bayer remains on solid footing with its narrow moat, and the expected completion of the Monsanto acquisition later in 2017 should further strengthen the company’s competitive positioning. In the quarter, strong drug sales helped offset weakness in Bayer's other...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gro...
Bayer reported strong first-quarter results that were ahead of our and consensus expectations, but we don’t expect significant changes to our fair value estimate based on the minor outperformance, which was partly driven by the material science group and may not be sustainable. We continue to view the stock as undervalued with the investment community potentially overly concerned about a weak drug pipeline and the Monsanto acquisition. While Bayer’s pipeline lacks strong late-stage assets, w...
- Damien Conover
Bayer Posts Strong 1Q Results, Boosted by Material Science Growth; Sha...
Bayer reported strong first-quarter results that were ahead of our and consensus expectations, but we don’t expect significant changes to our fair value estimate based on the minor outperformance, which was partly driven by the material science group and may not be sustainable. We continue to view the stock as undervalued with the investment community potentially overly concerned about a weak drug pipeline and the Monsanto acquisition. While Bayer’s pipeline lacks strong late-stage assets, w...
- Damien Conover
The GMO Growth Story Is Not Over Yet
The GMO growth story has stalled, but it is far from over. Following the introduction of GMOs in 1996, GMO sales grew at a 35% average annual pace to 2013. Over the past few years, growth has ground to a halt, with major markets in North and South America reaching saturation and crop prices sinking from elevated levels. Reputational challenges haven't helped. More food companies are proudly labeling their products "GMO-free," more than half of EU members ban GMO planting, and some research casts...
- Damien Conover
Bayer's recent drug launches and diverse operations support steady gai...
Bayer issued 2017 guidance and reported fourth-quarter results that were in line with both our and consensus expectations, and we don’t expect a material change to our fair value estimate. The investment community appears to be too concerned about the Monsanto acquisition and a relatively weak pipeline, but we continue to view the stock as undervalued. While the company’s moat is weighed down by the no-moat material science group, we still think the company’s narrow moat is secure, buoyed...
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