UBS Upgrades Bayer to "Buy," Sets €52 Price Target Based on Glyphosate Settlement Progress

Investing.com - UBS upgraded Bayer’s rating from “Neutral” to “Buy” on Monday and raised the 12-month target price from €48 to €52, citing progress in the German life sciences company’s glyphosate litigation and a roughly 15% decline in its stock price over the past month. This news drove the stock up over 3%.

The core basis for the rating upgrade is the court ruling on March 4, which preliminarily approved Bayer’s $7.25 billion glyphosate settlement plan, with the deadline for plaintiffs to opt out set for June 4—earlier than the expected Supreme Court decision on the Durnell glyphosate case by the end of June.

Stay ahead with real-time news, stock impact insights, and Wall Street analysis - Save 50%

The U.S. Supreme Court oral arguments are scheduled for April 27, with a fairness hearing on final settlement approval set for July 9.

UBS states: “The 90-day opt-out period for Bayer’s settlement plan is shorter than we initially expected, which could increase the likelihood of plaintiffs choosing to join.”

UBS outlined five scenarios, with theoretical valuation ranges from €35 to €60. The baseline scenario at €52 assumes a 25% discount to the enterprise group.

The downside scenario at €35, down 13% from €40 on March 11, applies if the settlement fails and Bayer loses in the Supreme Court, with a 50% discount. The upside scenario at €60 assumes a 20% discount, with net debt reduced by €4.8 billion.

Bayer stated that “almost 100%” of plaintiffs need to continue opting in to push the settlement forward.

Regarding the Supreme Court, UBS cites a legal opinion from the U.S. Attorney General supporting Bayer’s position and notes that the long-term reversal rate for cases accepted by the Supreme Court is about 70%.

UBS values the pharmaceutical business at €45.27 billion with a 0.9x net present value, the crop science business at €48.47 billion, and the consumer health business at €13.41 billion, totaling an enterprise value (EV) of €107.16 billion.

After deducting net debt of €43.88 billion in 2026 and applying a 25% discount to the enterprise group, the per-share value is €48.3. Using a 7% equity cost and €0.50 dividend, the target price rises to €52.

Following Bayer’s guidance of approximately 50% year-over-year net sales growth for Nubeqa in 2026, UBS has raised the drug’s peak sales estimate from $5.7 billion to $6 billion. The bank expects a compound annual growth rate (CAGR) of about 4% for the pharmaceutical business from 2025 to 2030.

For 2026, UBS estimates revenue at €45.14 billion, earnings per share (EPS) at €4.42, and net debt at €32.42 billion. Bayer is trading at a 8.7x P/E ratio for 2026, a 37% discount to the European pharmaceutical industry average of 14.1x. UBS forecasts a 12-month total stock return of 36.2%.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.