Bayer AG: similar to buying Volkswagen three years ago?

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Bayer AG: similar to buying Volkswagen three years ago?

10 September 2021

What readers said about this report

German life science company Bayer is currently experiencing the biggest financial and PR disaster in its 156-year history. Following the 2018 merger with the American agrichemical business Monsanto, it is facing a wave of lawsuits in the US over its bestselling pesticide, Roundup. The company has lost 68% of its value.

However, Bayer does have the necessary strength to make it to the other side of the crisis:

  • A balance sheet strong enough to absorb the crisis.
  • A portfolio of other, profitable businesses to plough ahead with.
  • A leadership team and a vision to rebuild credibility vis-à-vis investors.

At a price of EUR 46, Bayer is valued at a 2022 price/earnings ratio of just 6.4 and it comes with a 4.8% dividend yield. You purchase a highly cash-generative business at a very low valuation, and get some of the world's most promising pharma and crop science projects thrown in for free.

Even another round of negative news about Roundup wouldn't dent the investment case. It's now all priced in.

Plus, there is a surprise in store for 2022 that the market does not currently see coming. Just like Volkswagen did recently, Bayer could surprise the market with a sudden turn of fortunes. I don't think you'll find this intel anywhere else yet.

Give this company one to two years, and it'll be a highly-valued growth stock again.

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|  What readers said about this report

Paul F.
September 2021

After reading your Bayer report, I am also very interested in Bayer. I had also followed this story casually and wanted to dig deeper into it.

Gene G.
September 2021

Enjoyed your report on Bayer. Agree that upside potential looks much greater than downside risk. Many thanks for another intriguing idea!

Heiner B.
September 2021

I have been a subscriber for some time now and would like to thank you very much for the always interesting reports. I also share the opinion on Bayer.

Paul P.
September 2021

I've read your research report on Bayer AG. The current situation and investment case are once again greatly worked out.

Wulf S.
September 2021

I bought Bayer following your report, and found the argumentation very well presented.

Paulo B.
September 2021

This might be the best report you have written. Excellent.

Sebastian G.
September 2021

Very good report about Bayer. Contrarian investments are my favourite ones!

Marian S.
September 2021

Thank you for the very interesting article about Bayer AG - I really appreciate all your weekly mailshots. It sounds like a no-brainer to invest in this one!

Bernhard S.
September 2021

Very well written and matches exactly my own analysis… .. this is by far my largest portfolio position…. I am equally convinced that we should see a 3-digit share price in 6-18 months…

Eugene M.
September 2021

Very excited to read this. I work in life sciences and have been very bullish on bayer. I've been scratching my head as to how they are only worth ~50b euro. Excellent work as usual, Swen!

l  Report updates

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16 November 2021

Report Update (PDF - 0.1MB)

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