BAYRY Skyrockets 62.9% YTD: Should You Buy or Sell the Stock?

The going has been good for the German pharmaceutical giant Bayer BAYRY this year. Shares have surged 62.9% year to date compared with the industry’s gain of 1.9%. The stock has also outperformed the sector and the S&P 500 index in this time frame.

BAYRY Outperforms Industry, Sector & S&P 500 Index

While challenges in its Crop Science business and litigations have bogged down investors in the past couple of years, 2025 has proved to be a turnaround for Bayer.

The impressive performance can be attributed to new drug approvals and encouraging pipeline progress.

Let's delve further into BAYRY’s strengths and weaknesses to analyze how to play the stock at present.

BAYRY’s Efforts to Strengthen Pharma Business

Bayer’s new products, such as prostate cancer drug Nubeqa and kidney disease drug Kerendia (finerenone), continue to maintain their impressive momentum in the Pharmaceutical division and offset the negative impact of a decline in Xarelto sales.

The FDA recently approved a label expansion of the kidney disease drug Kerendia. The regulatory body approved finerenone for the treatment of adult patients with heart failure (HF) and a left ventricular ejection fraction (LVEF) of ≥40%.

With the latest FDA approval, Kerendia has become the only non-steroidal mineralocorticoid receptor antagonist approved in the United States for chronic kidney disease associated with type 2 diabetes and for HF with LVEF of ≥40%.

Last month, the FDA also expanded Nubeqa’s label for a third indication for patients with advanced prostate cancer. Following this approval, Nubeqa is the first FDA-approved androgen receptor inhibitor for the treatment of patients with hormone-sensitive prostate cancer, in combination with androgen deprivation therapy, with or without chemotherapy.

In addition, Nubeqa is approved for the treatment of adult patients with non-metastatic castration-resistant prostate cancer, who are at high risk of developing metastatic disease.

We remind investors that Nubeqa achieved blockbuster status in 2024, with annual sales reaching €1.52 billion for full-year 2024.

BAYRY expects to launch two new drugs — elinzanetant, a hormone-free treatment for menopause symptoms, and acoramidis, a drug for the treatment of a certain type of heart disease.

Elinzanetant was recently approved in the UK for the treatment of moderate to severe vasomotor symptoms (VMS or hot flashes) associated with menopause under the brand name Lynkuet. Elinzanetant is under regulatory review in the United States, countries of the European Union and other markets around the world for VMS.

Bayer recently submitted a marketing authorization application to the European Medicines Agency for its investigational contrast agent gadoquatrane for contrast enhancement in magnetic resonance imaging to detect and visualize known or suspected pathologies in all body regions and the central nervous system in adults and pediatric patients, including neonates.

A new drug application has also been submitted to the FDA for gadoquatrane for the above-mentioned indication.

The European Commission has also granted a label extension for Eylea (aflibercept 8 mg, 114.3 mg/ml solution for injection) with extended treatment intervals of up to 6 months for the treatment of two major retinal diseases, neovascular (wet) age-related macular degeneration and visual impairment due to diabetic macular edema.

Please note that Bayer’s HealthCare unit co-develops Eylea with Regeneron REGN, which records net product sales of Eylea in the United States. BAYRY records net product sales of Eylea outside the country. REGN records its share of profits/losses in connection with the sales of Eylea outside the United States.

Bayer also has a collaboration agreement with Johnson & Johnson JNJ for oral anticoagulant Xarelto. The drug is marketed by J&J. Bayer earns license revenues from JNJ for Xarelto sales in the United States.

The company also aims to strengthen its pharmaceutical pipeline. In 2021, Bayer acquired the clinical-stage biopharmaceutical company Vividion Therapeutics to expand its presence in precision small-molecule therapeutics, with a primary focus on oncology and immunology.

BAYRY has expanded its pipeline in new modalities of cell therapy through the acquisition of BlueRock, and in gene therapy, through the AskBio buyout.

Cost-Cutting Measures Should Boost BAYRY’s Earnings

Bayer has implemented a new operating model to reduce hierarchies, eliminate bureaucracy, streamline structures and accelerate decision-making processes. The company is also undertaking significant job cuts. These efforts should help the company cut costs.

BAYRY’s Valuation and Estimates

From a valuation perspective, BAYRY is currently quite inexpensive. Going by the price/earnings ratio, the company’s shares currently trade at 5.90X forward earnings, quite below 15.16X for the industry. The stock is trading below its five-year mean of 6.94X.

The Zacks Consensus Estimate for 2025 earnings per share has risen from $1.25 to $1.30 while that for 2026 has increased from $1.31 to $1.35 over the past 60 days.

Invest in BAYRY

Pharma bigwigs are mostly considered safe havens for investors interested in this sector. BAYRY has one of the most diversified portfolios in the industry. The pharma business continues to march ahead. Newer drugs pave the way for growth, and the approval of additional new drugs should further bolster the portfolio.

New launches in the Consumer Health business are a positive.

While challenges for the Crop Science business and significant Roundup litigation charges continue to be a headwind, the company’s recent upbeat performance provides distressed investors with a ray of hope.

We recommend the stock to investors at current levels as we believe the worst is most likely behind BAYRY and the company is poised for a turnaround hereafter.

BAYRY currently carries a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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