Here’s why the Bayer share price may rebound after earnings

Bayer share price pulled back to €27.6 on Tuesday as investors waited for its financial results. It has dropped by 7.3% from its highest level this year, and is about 50% above its lowest level this year. 

Bayer share price technical analysis

The daily chart shows that the Bayer stock price pulled back from the year-to-date high of €29.77 last month to the current €27.60. This chart shows that it has been forming a series of higher highs and higher lows, and is now at a lower point. 

Bayer stock price remains above the 50-day moving average, which has provided it with substantial support since May. The Relative Strength Index (RSI) has moved to the neutral point at 50.

Therefore, the stock will likely resume the uptrend as bulls target the year-to-date high of €29.77. A move above that level will point to more gains, potentially to €30.85, the highest point in September last year. This target price is about 12% above the current level. 

The bullish Bayer share price will be invalidated if it drops below the support at €26.8, which is the 50-day moving average. 

Bayer earnings ahead

The most important catalyst for the Bayer stock price will be the upcoming financial results.

Its recent quarterly results will provide more color on its performance. The most recent results showed that its sales were flat to €13.73 billion as its volume and prices retreated. 

Most of the decline happened in the Latin American region, where sales dropped by 10.4% to €1.4 billion. Its EMEA sales also declined by 1.9%, but was partially offset by an increase in the North American and Asia Pacific regions.

READ MORE: Bayer share price is rising: does it have more upside?

The decline, as has happened in the past, was because of its crop science division. This division has deteriorated because of the weaker prices of top commodities like corn and soybeans.

Crop science’s revenue dropped by 4.1% to €7.9 billion. This decline was offset by a 4.4% increase in the pharmaceuticals division, whose revenue jumped by 4.4%. The division was boosted by the volume and price. 

Eylea’s sales rose to €815 million, while the Xarelto’s sales crashed by 31.6% to €633 million. Xarelto’s sales plunged because of the rising competition from genetics medicines. Some of its top growth drugs were Nubeqa, Aspirin, and Kerendia.

Analysts expect this week’s results to show that its revenue was €10.79 billion, with the strong euro having a 4.5% hit on its numbers. The average EBITDA is expected to be €1.8 billion, down from €2.1 billion last year, while its net income will be €67 million, a big improvement from the €34 million loss last year. 

Bayer will also update on the ongoing Roundup litigation. In May, WSJ said that it was seeking a settlement as it explored a Monsanto bankruptcy.