Bayer AG (BAYRY) has been shifting its focus on the healthcare segment in the past few years in order to maintain solid growth in the long run. The acquisition of Schering AG should improve its product portfolio, and we expect higher-cost synergies from the acquisition. The company reported 2Q08 financial results which were in line with our expectations. We maintain our Hold rating.

Bayer’s future growth should be mainly driven by its healthcare segment. However, we are concerned about the slowdown in this segment, especially in the fourth quarter of 2007 and in the first quarter of 2008. Sales in the healthcare segment only grew by 0.9% in 4Q07 and 3.4% in 1Q08.

The failure of Nexavar for lung cancer and the U.S. court ruling against Yasmin will have negative impact for the growth of the segment. Therefore, we are lowering our estimates for 2008 and beyond.

The CropScience and Material

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The Masters haven't mentioned Onyx Pharmaceuticals Inc (NASDAQ:ONXX) in a long time, since our 100%+ gain with our Master Picks Newsletter.  Barron's is jumping on the bandwagon now that shares are down to $33.  Can Nexavar, Onyx's cancer drug take the company and stock back into the spotlight? Onyx Pharmaceuticals Inc's (NASDAQ:ONXX) cancer drug has bright potential in treating several forms of the disease and could raise the biotech company's shares, according to a report on Sunday in Barron's (Paid portion only, thus no link provided). With sales of its drug Nexavar, now approved to treat kidney and liver cancer, expected to hit $1 billion next year, Barron's said one health-care investor is looking for earnings of $1.93 per share, and valuing the stock at $65 to $75 per share....