Bayer’s Q1: Pharma Growth and Soybean Licenses Propel Earnings, Legal Overhang Persists

Bayer's Q1 2026 earnings beat on operating profit, driven by pharma blockbusters Nubeqa and Kerendia and crop science licensing, but legal costs and €32.5B debt weigh on outlook.

Bayer kicked off 2026 with a Q1 that beat market expectations on operating profit, yet the numbers tell a story of two worlds. The pharmaceuticals division showcased a new generation of drugs breaking through the billion-euro barrier, while Crop Science fueled earnings with lucrative soybean licensing deals. But beneath the surface, a net debt load of €32.5 billion and a cash outflow of over €2 billion for legal settlements underscored the persistent drag of ongoing litigation.

The pharma unit’s star performers were prostate cancer drug Nubeqa and chronic kidney disease treatment Kerendia. Combined, they generated €1 billion in quarterly sales — with Nubeqa jumping 57% and Kerendia soaring 84%, driven by strong demand in the U.S. and China. Yet overall pharma revenues edged down 0.5% on a currency-adjusted basis to €4.25 billion, as patent expirations for former blockbuster Xarelto and declining Eylea sales partially offset the gains. Segment EBITDA before special items fell 7.5% to €1.242 billion, reflecting higher selling and research costs for Nubeqa, Kerendia, and the pipeline candidate Asundexian.

That pipeline candidate is gathering momentum. China’s drug regulator CDE accepted Asundexian’s marketing application for priority review. The oral Factor XIa inhibitor cut the risk of recurrent stroke by 26% in a Phase 3 trial without significant safety issues, positioning it as a potential multibillion-dollar earner — if approved. Kerendia is also pushing into new indications, with positive top-line data in non-diabetic chronic kidney disease and Type 1 diabetes expanding its addressable market.

Crop Science was the engine behind the group’s earnings beat. The agribusiness unit delivered moderate revenue growth but benefited from high-margin soybean licensing income, pushing group adjusted operating profit up 9% to €4.45 billion — comfortably ahead of analyst forecasts. Group sales rose 4.1% on a currency- and portfolio-adjusted basis to €13.405 billion, despite a €886 million currency headwind. Net profit more than doubled to €2.763 billion, translating into reported earnings per share of €2.81. Adjusted core EPS stood at €2.71, up 12.9% year-on-year.

Free cash flow told a bleaker story, plunging to negative €2.32 billion. The culprit: net cash outflows of €2.002 billion for settlements of PCB and glyphosate lawsuits — an expected but painful drain. That left net financial debt at €32.5 billion, a weight reflected in the stock’s valuation of less than 0.8 times sales, far below the industry average.

Analyst sentiment is split. UBS rates Bayer a buy with a €52 target, while Deutsche Research sees the shares fairly valued at €45 and cites unresolved legal risks. Those risks come to a head this summer: a June deadline for a proposed class settlement and a pivotal Supreme Court ruling expected in July on a glyphosate-related case. The outcomes could determine whether the conglomerate eventually splits apart.

Despite the uncertainty, Bayer’s stock has rallied roughly 71% over the past twelve months, trading around €38 — still 23% below its February 2026 high. The company reiterated its full-year outlook for currency-adjusted sales of €45 billion to €47 billion and core EPS of €4.30 to €4.80, though the lower end of the profit guidance (€4.10) was also mentioned as a floor by management. For now, investors are weighing operational momentum against a legal calendar that could reshape the company’s future.