Bayer's 2016 outlook falls short, but maybe that's a favor to incoming CEO Baumann

Bayer is getting ready to change hands at the top, with CEO Marijn Dekkers set to make his exit on April 30. And investors aren't too excited about the slower-than-expected earnings growth Bayer predicts after his departure.

Incoming Bayer CEO Werner Baumann

Thursday, the company said it expected core earnings to increase by just a medium single-digit percentage for the year to pass €47 billion. That outlook hit below the forecasts of many analysts--including those at Bryan Garnier, who called the guidance a "significant disappointment," according to The Wall Street Journal.

With Dekkers heading for the chairman's role at consumer giant Unilever ($UN), the German pharma's intention may have been not to "burden" incoming CEO Werner Baumann with "too ambitious targets," Commerzbank analyst Daniel Wendorff told Reuters. But shares still sunk on the news.

Numbers weren't great for the quarter at hand, either, with fourth-quarter profit figures also missing the consensus mark. EBITDA before special items inched up by 4% year-over-year to €1.9 billion, falling short of the €2.04 billion analysts thought they'd see--and higher R&D and marketing expenses in the HealthCare unit were partially to blame, the company said.

Luckily for Bayer, it has a group of high fliers in the pharma space, which helped sales in its healthcare segment jump 8.5% for the period. For one, there's next-gen anti-coagulant Xarelto, which leaped 34.2% for the year when adjusted for currency effects. And while execs at Bristol-Myers Squibb ($BMY) and Pfizer ($PFE)--who share rival med Eliquis--think they can overtake Bayer's contender, the Leverkeusen-based drugmaker still has big movers Stivarga and Xofigo in the cancer arena, Adempas in the pulmonary arterial hypertension space, and eye med Eylea, which expanded by a currency-adjusted 57.4% for the year.

At least one analyst thinks Eylea can keep it up enough to exceed Bayer's own forecasts, too. The drug "has share gain potential" from its first-to-market competitor, Novartis' ($NVS) Lucentis, Bernstein's Ronny Gal wrote in a recent note to clients. He sees the med raking in €2.5 billion by 2020, "significantly ahead of the €1.5 billion guided by Bayer."

- read the release
- get more from Reuters
- see The Wall Street Journal's take (sub. req.)

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