According to JP Morgan’s research note published yesterday, the weak performance of Bayer’s pharmaceutical business and Cipro’s patent expiry would keep the company’s operating margins under pressure. Bayer’s Q4 operating income is expected to be €174 million, as compared to €118 million reported in the same quarter last year, the analysts mention. However, the performance of Bayer’s healthcare segment has been adversely affected by the enhanced spending on R&D, the launch costs associated with Levitra and the increased competition for Cipro in H2, the analysts believe.

According to JP Morgan, weak demand and the high cost of raw materials would continue to adversely impact the performances of the company’s polymers and chemicals divisions. The overvaluation of Bayer’s healthcare assets would also restrict the expected value addition from the company’s restructuring efforts, the analyst points out. The company’ current share price is already higher than its fair value, JP Morgan says.

JP Morgan issues an "underweight" rating on Bayer.

Source : http://www.newratings.com