Bayer's Second China Nod Lands as Goldman and UBS Lift Their Targets

Two regulatory wins in China and a forecast upgrade have handed Bayer a rare stretch of good news, though the Street is still haggling over how much of the earnings beat is repeatable. Goldman Sachs raised its price target on the German group to EUR 66 from EUR 63.50 today while reiterating its buy rating, and UBS followed with an identical move to EUR 66 from EUR 62, according to dpa-AFX. Neither house changed its recommendation.

The shares added 4.5% today, extending the previous session's advance of the same size, after quarterly results and a higher full-year outlook went down well with investors. Reuters reported that the improved performance of the pharmaceuticals division was the decisive factor behind the upgraded profit guidance.

What the quarter actually delivered

Bayer booked group revenue of EUR 10.053 billion in the third quarter of 2026, with EBITDA before special items reaching EUR 1.615 billion. The Pharmaceuticals division contributed EUR 4.680 billion of sales, and its EBITDA before special items climbed 23.6% to EUR 1.292 billion. Adjusted earnings per share came in at EUR 0.31. Management pointed to Nubeqa and Kerendia as the main engines behind the brighter annual expectations.

For the full year, Bayer now projects currency-adjusted EBITDA before special items of between EUR 9.8 billion and EUR 10.3 billion. The free cash flow outlook was lifted to between minus EUR 1.5 billion and minus EUR 0.5 billion — still a cash outflow, albeit a smaller one than previously flagged.

Outside pharma, the picture was softer. Crop Science posted a currency- and portfolio-adjusted decline of 2.4% on revenue of EUR 3.884 billion, while Consumer Health generated EUR 1.445 billion in sales, a currency- and portfolio-adjusted gain of 0.1%.

Should investors sell immediately? Or is it worth buying Bayer?

Two very different verdicts

The analyst notes published Tuesday show how far apart the interpretations can sit. JPMorgan kept its overweight rating and a EUR 61 target, highlighting the strength of the pharmaceutical business and the more optimistic guidance. Jefferies stuck with hold and a EUR 46 target, flagging possible one-off effects behind the numbers. Same quarter, same figures — opposite conclusions about what they are worth.

That split is the more useful lens on Bayer right now than the headline gain. The regulatory news flow adds colour to the pharma story but does not settle the question of how much of the reported earnings power will stick.

From trial programme to approval

Sevabertinib has been cleared in China as a first-line treatment for adults with advanced HER2-mutated non-small cell lung cancer, Bayer said yesterday. The decision rests on results from the ongoing Phase I/II SOHO-01 study — and "ongoing" is the operative word. An approval is not the same as a completed trial programme, and no specific revenue contribution can be read off a regulatory green light.

The asset sits alongside a second China win: on 26 October, Asundexian was approved under the brand name Sunharbo for reducing the risk of stroke after non-cardioembolic ischaemic stroke or high-risk TIA. Bayer described it as the first factor XIa inhibitor cleared anywhere in the world.

Two different medicines, one shared lesson. Pharmaceutical development becomes tangible for investors when studies turn into regulatory decisions — but the count of approvals is a poor yardstick on its own. What matters for valuation is what grows out of the cleared indications, and that payoff should not be taken as given.

The distinction is drier than the share price move, and more instructive for anyone trying to price the stock. Bayer can point to concrete approvals and a stronger quarter. Treating regulatory success, a running study and a future earnings contribution as one and the same thing is where the reasoning tends to go wrong.

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