*Bayer Aktiengesellschaft (BAYRY)
German life sciences company Bayer posted strong first-quarter results. Operating income rose 10% to $4.8 billion, 5% above analysts’ forecast. Bayer is working to sell its Animal Health & Consumer Health units to focus on Pharmaceuticals & Crop Science.
Bayer is taking a tough stand in settling weed killer cancer claims resulting from its purchase of Monsanto in 2018. Uncertainty from this litigation elevates the risk of Bayer ADRs. They have a high yield and trade at 8.0X-forward EPS versus prospects for 10% EPS growth in the next 12 months. (Next earnings: August 4)
Sam Subramanian, PhD, AlphaProfit Sector Investors’ Newsletter, alphaprofit.com, 281-565-6963
*Gentherm Incorporated (THRM)
Gentherm Inc. is applying its technologies in new areas, such as its medical business, where 1Q sales rose a strong 48.3%, highlighting its ability to maneuver quickly in a rapidly changing environment.
Hospitals in the U.S. and Europe are using Gentherm’s Blanketrol solutions to help with the temperature management of COVID-19 patients. The company has also received FDA emergency use authorization for its Hemotherm Model 400CE Dual Reservoir Cooler-Heater, a blood oxygenator/heat exchanger that is used to cool or warm blood during long-term respiratory/cardiopulmonary support.
Although management withdrew its 2020 guidance due to the pandemic, we believe that Gentherm is well positioned in key markets, which should drive revenue growth and margin expansion as the U.S. economy reopens. Our target price of $50, implies a potential total return of 14% from current levels.
Jim Kelleher, CFA, Argus Weekly Staff Report, argusresearch.com, 212-425-7500, June 10, 2020