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Fresh off strong quarterly numbers, European drug manufacturer Bayer seems likely to continue its upward momentum with a stocked pipeline, Barron's says. The company has undergone a significant transformation through both acquisitions and divestitures since earlier in the decade when profits were low and liabilities were high. "We've undergone a complete restructuring, and our portfolio is concentrated on growing markets in which we have a good market share," CEO Werner Wenning said. Bayer boasts 20 projects in Phase III testing, 17 in Phase II, and 14 in Phase I. This includes the anticoagulant Rivaroxaban, set to come out this year in Europe, which Isabella Zinck, analyst at UniCredit, notes, "easily has blockbuster potential." Currently, Bayer is focusing its pharma R&D on four areas where it sees potential for high growth: cancer treatment, cardiology, women's health care, and diagnostic imaging (such as X-rays and MRIs). Werner believes concentrating on these areas will allow Bayer to grow pharma sales 6% each year over the next two years and perhaps at a higher rate beyond. Bayer forecasts this year's sales up 10%, and Ebitda margin increasing from 20% to 22%. The company also makes chemicals and industrial materials. It is currently looking to increase product capacity, focusing on production in China. Citigroup has a price target of $88 for the stock, nearly 15% higher than the current price.

Sources: Barron's
Commentary: Bayer Buyout Rumors Materialize AgainIn-Line With Strategy, Dow Chemical Acquires Bayer's Cellulose Business
Stocks/ETFs to watch: BAY. Competitors: BF, JNJ. ETFs: PJP, IXJ

Source: Bayer Ready to Cure Investors’ Headaches -- Barron’s