Bayer stock price slips after reporting a Q2 loss of $11.2 billion

Bayer stock price slips after reporting a Q2 loss of $11.2 billion
Written by:
Michael Harris
4th August, 11:25
  • A net loss of over €9.5bn reported for the second quarter vs €404m profit a year ago
  • Bayer saw a 5.6% rise in EBITDA to €2.8 billion on the back of the growth in its agricultural business
  • Bayer stock price slips 4% to trade near 3-month lows

Shares of Bayer AG (ETR: BAYN) slipped 4% after the German pharma giant reported a big loss in the second quarter of the year. Bayer stock price is now trading near 3-months lows. 

Fundamental analysis: Roundup costs push Bayer to a loss

Bayer, the German pharmaceutical and chemicals giant, said it encountered a challenging second quarter amid the pandemic and lawsuits. The Leverkusen-based firm reported a net loss of just over €9.5bn ($11.2bn). This is significantly lower than a profit of €404m in the same period a year ago.

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Still, Bayer was able to report a 5.6% rise in EBITDA to €2.8 billion on the back of the growth in its agricultural business. This is higher than €2.74 billion expected from the market’s analysts.

A huge loss came as a result of the pandemic that led to sales falling by 2.5%. More importantly, Bayer was forced to pay over $10 billion to settle around 125,000 lawsuits in the US. Bayer was sued for its Roundup weedkiller that allegedly causes cancer. 

As a result, the German giant now expects its sales to come between €43 billion and €44 billion for the full year. EBITDA before special items is now projected at €12.1 billion. Both sales and EBITDA are projected at lower figures than previously communicated. 

In separate news, Bayer sold its animal health business “Bayer Animal Health” for $6.89 billion to Elanco, out of which $5.17 billion is in cash.

“Combines Elanco’s longstanding focus on the veterinarian with Bayer Animal Health’s direct-to-consumer expertise to open new opportunities to fuel growth,” Elanco said in a statement. 

Technical analysis: Stock plunges

Bayer stock price fell 4% in the aftermath of the Q2 earnings report. Shares are now trading close to the €56.00 mark, the lowest levels recorded since May. Bayer share price is struggling to sustain the rebound as it trades nearly 20% lower compared to the June high of €73.63 mark. 

Bayer stock daily chart (TradingView)

The zone between €55.00 – €56.00 is where a short-term support line is located. Its break would open the door for a trip to €53.00 as the stock trades below both the 100-DMA and 200-DMA. 

Summary

Bayer registered a net loss of just over €9.5bn ($11.2bn) due to falling sales and over $10 billion paid to settle around 125,000 lawsuits in the US for its Roundup medicine. Shares are trading 4% lower in Germany today near a 3-month low. 

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