Bayer Shares Outperform DAX Despite Lawsuit Setbacks

Bayer's shares rose 1.1% to €27.66, bucking the weak trend on the DAX, after exceeding quarterly expectations, particularly in adjusted operating profit (EBITDA), thanks to the CropScience division. The pharmaceuticals division also showed positive development, making Bayer more confident about 2025. Despite setting aside more money for US lawsuits, investors were not deterred.

Bayer AG's shares rose 1.1% to €27.66 on Friday, outperforming the broader DAX index, after the company reported stronger-than-expected second-quarter earnings. The German pharmaceutical and biotechnology giant exceeded market expectations, particularly in adjusted operating profit (EBITDA), driven by the Crop Science division. The Pharmaceuticals division also demonstrated positive growth, bolstering Bayer's confidence for the remainder of 2025 [2].

Q2 2025 Performance

In the second quarter of 2025, Bayer reported Group sales of approximately €10.7 billion. The Crop Science division led the operational beat, with EBITDA reaching €700 million, a 55% increase over Jefferies’ estimate and 33% higher than consensus. Sales in this segment rose 2.2% on a currency- and portfolio-adjusted basis [2].

The Pharmaceuticals division delivered 0.6% growth in adjusted sales, outperforming expectations of a 2% decline. EBITDA in this unit was €1.1 billion, slightly below Jefferies’ forecast of €1.172 billion and down 17% from the prior year [2].

The Consumer Health division underperformed on the top line, with sales growing 0.2% against a 3.5% estimate. EBITDA for this unit totaled €300 million, 6% below the estimate and 4% lower year over year [2].

Financial Outlook

Bayer has revised its 2025 financial guidance, projecting Group sales of €46 to €48 billion and EBITDA before special items of €9.7 to €10.2 billion. The company expects core earnings per share to be between €4.80 and €5.30. Currency effects are anticipated to reduce Group sales by €2 billion and EBITDA by €500 million, while positively impacting net financial debt by €1.2 billion [1].

Litigation and Provisions

Bayer has set aside €1.2 billion for Roundup litigation, part of a total €1.7 billion provision for US legal issues. The company has settled 131,000 of 192,000 glyphosate claims, reducing unresolved claims to 61,000. Additional provisions of €530 million were recorded for PCB-related cases, including the Burke case and potential settlements related to the Sky Valley Education Center [1].

Special Items and Future Outlook

Special items in EBIT for Q2 totaled approximately -€1 billion, mainly due to impairment loss reversals and litigation provisions. For the full year, Bayer expects special items in EBITDA to range from -€3.5 to -€2.5 billion. The company continues to monitor geopolitical developments and their financial impacts [1].

Investment Implications

Despite setting aside additional money for US lawsuits, investors were not deterred by Bayer's strong Q2 performance. The company's revised financial outlook and robust pipeline of innovative drugs, such as Kerendia and Nubeqa, position it for continued growth in 2025. Analysts like Goldman Sachs project a €33 stock price by 2026, assuming successful regulatory approvals and strong execution [3].

References

[1] https://chemxplore.com/news/bayer-upgrades-currency-adjusted-sales-and-earnings-guidance-for-2025-and-establishes-additional-provisions-for-litigation-in-the-united-states
[2] https://www.investing.com/news/earnings/bayer-shares-rise-after-q2-earnings-beat-guidance-raised-despite-litigation-hit-4165031
[3] https://www.ainvest.com/news/bayer-pharmaceutical-division-high-conviction-growth-story-2025-2508/