Advertising. Bayer gives hope. Just twelve people are taking part in the clinical phase I study to research a new cell therapy. Physicians inject living cell material into the brain of test subjects suffering from Parkinson’s disease, which is intended to replace damaged or dead cells. Admittedly, that doesn’t sound very pleasant and is undoubtedly risky, but for people with incurable diseases like Parkinson’s, the cell therapy in which Bayer subsidiary BlueRock Therapeutics specializes is a glimmer of hope. Bayer and its subsidiaries conduct research in many areas, including gene therapy, for example. It may be possible in the future to cure cancer with cell or gene therapies.
In oncology in particular, the Leverkusen-based company has great ambitions: they want to become one of the top 10 in the industry by 2030, and the group is currently among the top 20. But that can only work with new, successful therapies. And Bayer urgently needs them. Analysts criticize that the group currently has too few promising drugs in the pipeline.
They see the position in the agricultural business, the second important pillar of the group, quite differently. Here analysts praise the innovations in agrochemicals and seeds as well as the strong market position in digital solutions for agriculture. Bayer generated 45.8 percent of consolidated sales in the past fiscal year in the Crop Science division, 41.6 percent in the Pharmaceuticals division, and the rest in Consumer Health.
In the first half of 2022, the group increased sales by a good 18 percent year-on-year to EUR 27.5 billion. Earnings before interest, taxes, depreciation and special items increased by a good 28 percent to 8.6 billion euros. The bottom line, however, was a loss of 298 million euros in the books. On the one hand, impairments due to increased capital costs of 1.46 billion euros burdened the result, on the other hand, provisions of 694 million euros were formed for legal disputes in connection with the chemical PCB (polychlorinated biphenyls) – once produced by Monsanto. Bayer is confident for the year as a whole and has raised its sales forecast from EUR 46 billion to between EUR 47 and 48 billion. The result should also be slightly higher than originally expected.
Despite Bayer’s good market position and promising long-term prospects, there are uncertainties. For example, the company has set up large provisions for legal disputes – especially in connection with the weed killer Roundup – but the legal battles for the former Monsanto products are not over.
Investors who view Bayer stock positively based on the prospects outlined but want to reduce risks, not least because of the legal disputes, can consider investment alternatives such as reverse convertibles. These securities offer attractive interest income for a reasonable period of time and are also equipped with a risk buffer at maturity.
7.25 percent pa fixed interest rate and 15 percent bullet buffer after one year
the DekaBank 7.25% Bayer reverse convertible 10/2023 (WKN DK07GU) pays a fixed interest rate of 7.25% pa based on the nominal amount (EUR 1,000.00) on maturity after one year. In order for repayment to take place at par, Bayer stock must close at least at or above the strike price (85.00 percent of the starting value) on the valuation date (October 12, 2023).
Otherwise, there is a risk of repayment losses, since instead of the par value, Bayer shares that have fallen in value are transferred to the investor at 85.00 percent of the starting value. In addition, like any debt security, the reverse convertible is subject to the issuer risk overall. Accordingly, in the event of DekaBank’s insolvency, there would be a risk of losses up to and including the total loss of the nominal amount invested.
The subscription runs from 09/26/2022 to 10/14/2022, subject to extension or shortening.
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Disclaimer: The information contained herein does not constitute a recommendation to buy or sell the financial instrument and cannot replace individual advice. This advertising information does not contain all relevant information about this financial instrument. Before making an investment decision in certificates, potential investors are recommended to read the securities prospectus in order to fully understand the potential risks and opportunities of the investment decision. The approval of the prospectus by the competent authority should not be construed as an endorsement of the securities being offered. The securities prospectus and any supplements can be found at https://www.deka.de/deka-gruppe/wertpapierprospekte under the tab “EPIHS-I-21”, the Final Terms below https://mmscache.deka.de/DE000DK07GU8_FT.pdf be downloaded. All securities information and the current basic information sheet are also available free of charge from your Sparkasse or DekaBank Deutsche Girozentrale (www.deka.de), 60625 Frankfurt. You are about to purchase a product that is not simple and can be difficult to understand.
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Hussam Masri is in charge of the expansion and development of the strategically important “Private Banking and Wealth Management” division and in this function he is responsible for the Private Banking Sales, Wealth Management, Private Banking Sales Strategy, product specialists and the certificates business and product marketing units for the Deka Group responsible.