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January 10th, 2024 | 07:30 CET

Bayer with a blockbuster! Vonovia weak! And how are Desert Gold shares doing?

  • Mining
  • Gold
  • RealEstate
  • Pharma
Photo credits: Vonovia SE

While the DAX, Dow & Co. started the new year weakly, Bayer shares are holding up surprisingly well and can maintain the price gains from the end of 2023. The share price is being supported by positive news. A new blockbuster is waiting in the wings. Vonovia shares, on the other hand, are suffering from profit-taking, although analysts see further upside potential. Is concrete gold celebrating a comeback? And what about real gold? The price has weakened recently, but analysts believe USD 2,200 per ounce is possible, and central banks continue buying heavily. This should benefit not only the major gold producers but also low-cost explorers such as Desert Gold.

time to read: 3 minutes | Author: Fabian Lorenz
ISIN: BAYER AG NA O.N. | DE000BAY0017 , VONOVIA SE NA O.N. | DE000A1ML7J1 , DESERT GOLD VENTURES | CA25039N4084

Table of contents:


    Justin Reid, President and CEO, Troilus Gold Corp.
    "[...] Troilus has the potential to be an entire gold belt. All of our work to date points to this, and each drill hole makes the picture we have of the Troilus project much clearer. [...]" Justin Reid, President and CEO, Troilus Gold Corp.

    Full interview

     

    Desert Gold: 1 Million ounces of gold resource vs. market capitalization below EUR 7 Million

    Central banks continue to buy gold heavily. According to a recently published report by the World Gold Council, the official global gold reserves increased by a net 42 tons within one month. It is quite remarkable that so many central banks are hoarding gold on such a large scale. China, once again, was among the buyers. The country has increased its gold holdings for 13 consecutive months - and the trend is still rising. As of the end of October 2023, China's gold reserves of around 2,214 tons accounted for only 4.3% of its foreign exchange reserves. This is a relatively low figure. By comparison, Germany held 3,353 tons of gold in the summer of last year, representing a significantly higher proportion of foreign exchange reserves in the double digits.

    In addition to central bank purchases, analysts' forecasts also point to a rising gold price. The experts at BCA Research, for example, expect an increase to USD 2,200 in the current year. In their scenario, inflation will not fall to the general target level of 2%, making gold an attractive long-term hedge against inflation. The drivers of long-term inflation are numerous: growing government debt, geopolitical uncertainty and the setbacks in globalization.

    This should not only benefit the major gold producers such as Barrick & Co, but also the promising explorers such as Desert Gold. The Canadians are valued far below their gold resources. The identified gold resource is around 1 million ounces. The market capitalization is less than EUR 7 million. Desert Gold's 440 sq km SMSZ project is located in Mali, one of Africa's most exciting gold regions. Its neighbours include gold companies such as Barrick Gold and B2Gold. Desert Gold can, therefore, also be traded as a takeover candidate.

    Bayer: Good news from the pharmaceuticals division

    Bayer would likely only be a takeover candidate if it were split up. However, the management has rejected this idea for the time being. Shareholders of the Leverkusen-based company can look forward to a continuation of the positive news flow in January. It is particularly pleasing that Bayer has another promising blockbuster in the pipeline: Elinzanetant has achieved its primary objective in two pivotal Phase III trials. The drug for the relief of menopausal symptoms was convincing in reducing the frequency and severity of vasomotor symptoms - better known as hot flushes. Analysts at UBS expect the drug to go on sale next year and believe it will generate peak annual sales of USD 1.5 billion, making elinzanetant one of the great hopes in Bayer's pharmaceutical pipeline.

    Another piece of positive news comes from the DAX-listed company's pharmaceuticals division. Bayer has received approval in the EU for a higher dosage of the eye drug Eylea. With the higher dosage, Eylea should remain competitive against competitor drugs and copycat preparations for longer. In 2022, Bayer generated impressive sales of EUR 3.2 billion with Eylea.

    Will Vonovia shares rise above EUR 36?

    Vonovia shares were one of the positive surprises at the end of 2023. The real estate group's shares rose by around 40% between the end of October and New Year's Eve. Are the price losses at the start of the year just a breather, or has the share exhausted its potential for the time being? According to the latest analysts' opinions, the Vonovia share is heading further north. JP Morgan believes that the share could rise to EUR 31. The share price currently stands at EUR 26.91. According to the analysts, interest rates should fall in the current year. As a result, investors will again focus on the fundamentals of real estate companies such as Vonovia. This argues for rising share prices.

    Goldman Sachs has gone one better with the price target. The analysts believe that the Vonovia share could even reach EUR 36.40. The last time the share reached this level was in the Spring of 2022. Goldman also sees the expected decline in interest rates as the driver for the real estate group's shares. In their estimates, the experts have reduced Vonovia's cost of capital by 8%.


    Vonovia is a bet on falling interest rates in the current year. It remains to be seen whether the fall in inflation will provide scope for significant interest rate cuts. Desert Gold is more than a bet on a rising gold price. Even at the current level of the precious metal, the share appears to be significantly undervalued in terms of resources. The past few weeks have shown that Bayer shares can react strongly to positive news. Unfortunately, the glyphosate issue is likely to continue to hang over the share like a dark cloud.


    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

    Fabian Lorenz

    For more than twenty years, the Cologne native has been intensively involved with the stock market, both professionally and privately. He is particularly passionate about national and international small and micro caps.

    About the author



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