Bayer, Cardiol Therapeutics, K+S AG - Clear opportunities after bottoming out

Bayer AG - Bye Bye Bayer

It was one of the darkest days in the recent history of the Leverkusen-based company. With a temporary decline of up to 20%, Bayer shares not only tore through all support lines but also marked their lowest price since March 2009 at EUR 32.60.

One reason for the sharp sell-off was that a US jury ordered the chemical giant to pay more than USD 1.5 billion to three former users of the weedkiller in a glyphosate lawsuit.

"This judgment will not stand, and we will definitely appeal against it," Bayer announced over the weekend. The Company stated that the amount of punitive damages alone violates the US Constitution. "In contrast to previous proceedings, the courts in the recent cases have improperly allowed the plaintiffs to misrepresent regulatory and scientific facts," it continued.

The second shock announcement followed on Sunday evening. Accordingly, the Company announced the premature discontinuation of a Phase III trial investigating asundexian versus apixaban in patients with atrial fibrillation and stroke risk. However, the decision was not made by the management of the DAX Group but was based on the recommendation of the Independent Data Monitoring Committee (IDMC) as part of the ongoing study monitoring. Initially, the long-term plan was for asundexian to become the successor to the blockbuster drug Xarelto.

Due to the setback, the US bank JP Morgan continued to rate the chemical and pharmaceutical giant as "Neutral" and reiterated its target price of EUR 47. However, analyst Richard Vosser said that the discontinuation of the study was a bitter disappointment. As a result, the revenue potential of the drug, which was previously included at EUR 11.70 in the valuation model, is now reduced.

Cardiol Therapeutics - The 600% Opportunity

A specialist in the research and clinical development of innovative therapies for the treatment of cardiovascular diseases is valued at just CAD 77.76 million. Compared to the peer group, their undervaluation should catch the eye of any experienced investor. This is especially noteworthy considering that as of the end of September, the Canadian company had cash reserves of CAD 40.5 million, sufficient to finance the development of various programs until 2026.

Even better, their two clinical programs are progressing as planned or ahead of schedule. Earlier this month, Cardiol Therapeutics announced that recruitment for their Phase II MAvERIC-Pilot study for the treatment of recurrent pericarditis has exceeded 50% enrollment. The MAvERIC-Pilot study is enrolling 25 patients at various medical research centers in the United States that specialize in the treatment of pericarditis. The primary efficacy endpoint is the change in patient-reported pericarditis pain measured using an 11-point numeric rating scale from baseline to eight weeks.

In addition, the life sciences company announced study results showing that an experimental model of pericarditis induces a so-called mesothelial to mesenchymal transition (MMT), a transition from mesothelial cell to mesenchymal cell and that this process is inhibited by cannabidiol treatment, the active pharmaceutical ingredient in CardiolRx™. The Company's international research collaborators submitted a summary of these results to the 2023 Annual Meeting of the European Society of Cardiology Working Group on Myocardial and Pericardial Diseases, which took place in the Serbian capital, Belgrade.

From a chart perspective, everything is also moving in the right direction. After the share price reached a new yearly high of USD 1.24 at the beginning of August, following a strong upward movement, the share price formed a bottom around USD 0.75. Shares of Cardiol are currently trading at USD 0.87, on the verge of testing the downward trend established in August. A breakthrough to the upside would generate short-term price potential up to the previous yearly high. The upward trend is supported by the MACD and RSI indicators forming several positive divergences, which can be seen as a very bullish sign. Speaking of price targets! In their recent company update (November 15), the analysts at Canaccord Genuity maintained their price target of USD 6.00, representing a price opportunity of almost 600% return from current levels.

K+S AG - Analysts skeptical

The environment remains challenging; however, the third quarter may have heralded a turnaround for the supplier of potash and magnesium-based products for agricultural and industrial applications. The fact that potash prices in the critical Brazilian market are stabilizing compared to the first half of the year is positive. Due to the weak overall market, K+S had to lower its annual profit target in June due to weak potash prices. This was confirmed following the announcement of the figures for the third quarter.

Accordingly, the Company led by CEO Dr. Burkhard Lohr continues to expect EBITDA of between EUR 600 and 800 million for the full year 2023. K+S AG is thus far behind the record year of 2022, in which EBITDA of EUR 2.4 billion was posted. Adjusted cash flow is expected to be in a broad range between EUR 300 million and EUR 450 million, compared to the previous year's figure of EUR 932 million.

Following the publication of the figures, several analyst firms came forward. The Swiss bank UBS reiterated its "Sell" rating with a target price of EUR 13. On the other hand, analyst firm Jefferies downgraded K+S from "Buy" to "Hold". The price target was reduced from EUR 25 to the current level of EUR 15. Analyst Chris Counihan significantly reduced his estimates for 2024, which puts him 20% below analysts' consensus estimates for operating earnings.

On December 5, K+S AG will present at the 9th IIF - International Investment Forum. You can register here

Bayer shareholders experienced a black Monday. In contrast, K+S AG delivered solid quarterly results. Nevertheless, the analyst consensus remains skeptical. Financial experts, on the other hand, view the development of the biotech company Cardiol Therapeutics much more positively.