Bayer
Note: This is a daily stock update and the information stands true as of 18/02/26, 09:00 CET.
Company Update:
Expert Opinion:
This is great news as Bayer is becoming investable again for a large part of the investment that was spooked by the judicial risk. We will mechanically increase our target price as we had already accounted for the capital increase. But valuation isn't cheap anymore (EV/EBITDA at 9.7x for 2026 and 9.03x for 2027) following the massive share price rise of 77% over the last three months. Our expert expects a positive share price reaction and would take some chips off the table. This outcome is positive but that was the key catalyst expected and he believes some investors will be tempted to take some profits: better travel than arrive.
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Company Update:
Bayer has announced that it will settle all the Roundup (glyphosate; herbicide) related class action suits to resolve current and future claims for $7.25bn. Moreover, the firm also reached separate agreements to settle some other cases in Roundup and PCB litigation, and consequently, the overall litigation provisions and liabilities increased from €7.8bn to €11.8bn. The firm still sees the pending US Supreme Court decision as critical in getting clarity on such litigations.
However, the good part is that the $7.25bn settlement will involve declining capped payments for up to 21 years. The payouts in 2026 will total around €5bn. More importantly, these future payments are expected to be funded by senior bonds and instruments receiving equity-credit by rating agencies (i.e., longer-term, subordinate to senior debt, and the ability to defer interest payments or absorb losses). The firm will not resort to an authorized capital increase.
Also, the firm has shifted its full-year results date to 4 March 2026 (vs. 25 February 2026 previously).
Our take: We had assumed a capital increase of €6.5bn in 2026 at a discounted price and it was expected to increase the share count by >20%. Now that the equity infusion may no longer be required and the litigation monkey is almost off the back, we will increase our target price by around 15%.
Expert Opinion:
This is great news as Bayer is becoming investable again for a large part of the investment that was spooked by the judicial risk. We will mechanically increase our target price as we had already accounted for the capital increase. But valuation isn't cheap anymore (EV/EBITDA at 9.7x for 2026 and 9.03x for 2027) following the massive share price rise of 77% over the last three months. Our expert expects a positive share price reaction and would take some chips off the table. This outcome is positive but that was the key catalyst expected and he believes some investors will be tempted to take some profits: better travel than arrive.
For daily updates, subscribe to our newsletter and for detailed information, reach out to us at sales@alphavalue.eu
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