Bayer Lifts Guidance on Pharma Strength, but Cash Flow Stays in the Red

Bayer has raised its full-year earnings outlook on the back of a strong third quarter, sending the shares higher — though the group's cash generation remains stubbornly negative and analysts are split on how much of the beat is repeatable.

The leveraged-drugs-to-seeds group now expects EBITDA before special items of EUR 9.8bn to 10.3bn for 2026, up from a previous range of EUR 9.6bn to 10.1bn. The upgrade followed gains in both revenue and operating profit.

Third-quarter beat, with a caveat

Revenue rose 4.1% to EUR 10.053bn in the third quarter of 2026, while EBITDA before special items climbed 6.9% to EUR 1.615bn. Adjusted earnings per share came in at EUR 0.31, and the group posted a net loss of EUR 0.7bn. Free cash flow was negative to the tune of EUR 0.3bn in the quarter.

For the full year, Bayer lifted its free cash flow guidance to between minus EUR 1.5bn and minus EUR 0.5bn, an improvement on the prior forecast of minus EUR 2.5bn to minus EUR 1.5bn. Even so, the metric stays firmly in negative territory. Net financial debt stood at EUR 31.1bn.

Pharmaceuticals does the heavy lifting

Bayer singled out Pharmaceuticals as its growth engine. The division generated EUR 4.680bn in third-quarter revenue, up 8.0% in nominal terms and 6.4% after adjusting for currency and portfolio effects. Operating profit at the unit improved even more sharply: EBITDA before special items jumped 23.6% to EUR 1.292bn. Bayer also raised its expected full-year margin for Pharmaceuticals to 25% to 27%.

There was a further boost from the drug pipeline. Roughly a week ago, China approved Asundexian 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 world's first approved factor XIa inhibitor.

The sell-side splits

Jefferies kept its "Hold" rating and EUR 46 price target following the results. Analyst Michael Leuchten flagged positive surprises on revenue and adjusted EBITDA, but pointed out that core earnings per share fell short of consensus expectations.

JPMorgan, by contrast, reaffirmed "Overweight" with a EUR 61 target. Analyst Richard Vosser cited the strength of the pharma business, the EBITDA beat and the more optimistic outlook.

The shares rose 3.7% in the session after the numbers, with Reuters attributing the advance to the better-than-expected performance of the pharmaceuticals division and the raised annual guidance.