The medical giant is after another phase of testing a new drug for type II diabetes and chronic kidney disease. The test results proved positive, and analysts have issued further favourable investment recommendations.
Bayer is a German medical company that produces medical equipment, drugs and supplements. It operates globally and has about 100,000 employees, generating more than 44 billion euros in revenue last fiscal year.
In the last quarter, the company announced a whopping €12.8 billion in revenue (an 18.1% year-on-year increase) thanks to favourable currency movements and price increases. Despite a significant increase in net profit (up 87%), the company still posted a loss of €298 million.
Despite a significant reduction in costs in the last quarter, the corporation is still struggling to optimize them. This applies especially to the high price of energy, materials and the war in Ukraine. Dealing with intense competition from companies such as Pfizer, Roche, and Novartis remains problematic.
Last year, the company spent as much as 5.4 billion euros on research and development. This enormous amount is used to develop more breakthrough devices and drugs. One of them is Kerendia (finerenone). It's a medicine to treat type II diabetes and chronic kidney disease. Today, the results of the third phase of clinical trials were released, showing that the use of the drug allows a significant decrease in the mortality rate of the mentioned diseases. Kerendia has thus been approved for distribution in the US, Europe and China and could become an essential source of revenue for the company in the coming years.
Bayer has also begun new clinical trials of a thrombosis drug (asundexian). The company said on Sunday that the next phase will test the effectiveness and safety of asundexian in patients with atrial fibrillation and those suffering from certain types of stroke. According to Bloomberg, this is the next step in the company's plan to refresh its drug portfolio, which is under threat from low-cost competitors.
JPMorgan and Barclays have issued a buy recommendation for the German giant, maintaining their previous target price of €75 and €90, respectively. According to MarketScreener data, the current average target price is 78.91 euros for all 24 recommendations. This implies a possible increase in the share price of more than 46%, while the lowest and highest target prices are 55 and 106 euros, respectively. At the close of trading on Friday, the company's share price was €53.70.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
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