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June 5th, 2024 | 07:00 CEST

Bayer, Saturn Oil + Gas, TUI - Big price gains beckon here

  • Mining
  • Oil
  • Pharma
  • Travel
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The shares of Bayer, Saturn Oil & Gas and TUI have the potential to rise in the near future. At Bayer, the negative effects of the challenging year 2023 appear to have been priced in. Saturn Oil & Gas impresses with a strong cash flow and is traded as a future dividend share. Analysts see potential of over 100% here. TUI's balance sheet problems have largely been resolved, and the forecasts for 2024 and the summer season promise record bookings, which could give the share an additional boost - reason enough for us to take a closer look at the three companies.

time to read: 4 minutes | Author: Armin Schulz
ISIN: BAYER AG NA O.N. | DE000BAY0017 , Saturn Oil + Gas Inc. | CA80412L8832 , TUI AG NA O.N. | DE000TUAG505

Table of contents:

    Bayer - Good results in pharmaceutical studies

    Bayer has presented solid results for the first quarter of 2024, although group revenue fell slightly to EUR 13.765 billion due to negative currency effects. The Pharmaceuticals division performed particularly well, with revenue increasing by 3.9% to around EUR 4.36 billion. The sector benefited above all from new products such as the cancer drugs Nubeqa and Kerendia, which are used to treat chronic kidney disease. Despite lower demand for consumer health care, the growth potential for the rest of the year remains intact.

    In addition, the Pharmaceuticals division was able to hold its own thanks to the launch of new medicines and price increases, particularly for the eye medicine Eylea™. EBITDA before exceptionals increased by 8.0% to EUR 1.19 billion, driven by an efficient cost structure and lower spending in late-stage clinical development. Despite market and currency challenges, the focus on innovative products and investment in research and development is showing clear success. Bayer reaffirmed its full-year outlook on a constant currency basis and is focusing on debt reduction and the US litigation.

    Particularly noteworthy is the progress in drug development: The start of the Phase I study with 225Ac-PSMA-Trillium for the treatment of prostate cancer, as well as positive topline results from the Phase III OASIS 1 and 2 trials, mark significant milestones. These developments underscore Bayer's commitment to significantly improve patient outcomes and secure long-term growth through innovative therapies. Despite the challenges, Bayer remains an exciting option for investors with great potential in the pharmaceutical and healthcare sector due to its continuous progress and strategic adjustments. The share is currently trading at EUR 28.265.

    Saturn Oil & Gas - Nearly 40,000 barrels of oil equivalent per day through new acquisition

    Saturn Oil & Gas announced on May 6 the strategic acquisition of oil-weighted assets in southeast and southwest Saskatchewan valued at CAD 525 million. This acquisition expands daily production by 13,000 barrels of oil equivalent per day (boe/d) at a production weighting of 96% oil. This establishes Saturn as the fourth-largest producer in the province. A loan commitment of CAD 625 million from Goldman Sachs and an equity financing of CAD 100 million were secured for financing, which was completed on May 15. The Company is thus well-equipped to realize long-term growth and debt consolidation.

    Together with the loan commitment, an overdraft facility of CAD 150 million was concluded, which provides additional financial flexibility. These measures strengthen Saturn's capital structure and significantly reduce financing costs. The old loan, which had a high interest rate, will be repaid. The exact terms of the new agreement are not yet known but are expected to be significantly better. This strengthening of the financial base enables Saturn to sustainably finance its development program and efficiently tap future growth opportunities. In Q1 2024, Saturn achieved an average production of 26,394 boe/d, a significant increase compared to the previous year.

    Adjusted EBITDA increased to CAD 88.2 million, and adjusted cash flow to CAD 68.2 million. The new acquisition will significantly increase these figures in the future. Management expects an average production of 38,000 to 40,000 boe/d. These strategic measures and the good quarterly figures clearly show Saturn's commitment to growth. The next catalyst for the share price could be the announcement of the financing costs. This is also the view of the analysts at Eight Capital, who set a price target of CAD 7.35 in their study. The share has been dragged down by the recent slump in the oil price and is currently trading at CAD 2.47.

    TUI - Benefits from the insolvency of FTI

    Experts believe that the tourism industry is robust despite the insolvency of the FTI Group. High-priced holidays and cruises are in vogue, and remaining providers such as TUI will benefit from the FTI insolvency. This is also the view of investors, as the market has already recovered from the news. The TUI share rose to EUR 7.028 on Tuesday. The market leader TUI could post additional profits as the insolvency of FTI shifts the competition. The Hanover-based company will be able to secure some of FTI's customers.

    On May 15, the half-year financial report from October 2023 to March 2024 was published. The second quarter shows record sales of EUR 3.6 billion, an increase of 16% compared to the previous year. Adjusted EBIT improved by EUR 53.6 million to EUR -188.7 million. All segments, including Hotels & Resorts and Cruises, achieved record results. The positive business development and high demand confirm the forecast of at least 25% growth in adjusted EBIT for the 2024 financial year. A total of 2.8 million customers used the product range, which corresponds to an increase of 14%.

    Despite the pleasing business figures, CEO Sebastian Ebel plans to increase bookings via the TUI app in order to save costs and increase customer loyalty. In the medium term, TUI is aiming for annual app growth in the mid double-digit range. The distribution market is robust, and travel agencies remain very important. TUI expects revenue growth of 10% and a 25% improvement in operating earnings in 2024. Analysts are still undecided. After the quarterly figures, there were 3 "Hold" recommendations. Only Deutsche Bank sees the share as a "Buy" and has set a price target of EUR 10.50. One share is currently available for EUR 6.88.

    The shares of Bayer, Saturn Oil & Gas and TUI promise potential in the near future. Bayer scores with innovative drugs and a stable cost structure, which is convincing in a challenging market environment. Saturn Oil & Gas impresses with strategic acquisitions and solid financing, which strengthens production and growth. TUI benefits from robust business figures and market changes favored by the insolvency of a competitor. Investors should take a closer look at these three companies due to their specific strengths and positive future prospects.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Armin Schulz

    Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.

    About the author

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