Litigation risk is expected to narrow, while improved business growth drives Bayer’s target price up to €61

Overview

The report raises medium-term operating forecasts after Bayer reported its second-quarter 2026 results, completed the Apollo Women’s Health transaction, and recently issued debt. The core view is that the market remains mainly constrained by glyphosate litigation and has not yet fully reflected the fundamental improvements from growth in new pharmaceutical products, a reduced patent-expiry impact, Crop Science restructuring, and a new product cycle. As visibility on litigation settlement improves, investor focus is expected to shift back toward operating performance and valuation recovery.

Core views

First, after the Supreme Court issued a ruling favorable to Bayer, the likelihood of completing the glyphosate class-action settlement in the coming months has increased, with the fairness hearing on August 19, 2026 being a key milestone. Second, after erosion from generics and biosimilars for Xarelto and Eylea weakens in 2027, Nubeqa, Kerendia, Beyonttra, Lynkuet, and asundexian are expected to form a new growth portfolio for the Pharmaceuticals business. Third, the Crop Science business is benefiting from restructuring and new products such as Preceon Corn and Vyconic Soy, and is expected to grow faster than Corteva market expectations. Fourth, even using conservative valuation discounts and incorporating legal liabilities, net debt, and minority interests, Bayer remains significantly undervalued.

Analysis framework

The report first adjusts 2026–2030 segment revenue and underlying EBITDA forecasts based on the latest results, transaction, and financing developments, then analyzes the impact of pharmaceutical patent expiries, ramp-up of new drugs, Crop Science restructuring, and the new product cycle. Finally, it applies a sum-of-the-parts valuation method, using comparable-company multiples for the Pharmaceuticals, Crop Science, and Consumer Health businesses respectively, and deducting net debt, litigation liabilities, Apollo minority interests, and a conglomerate discount.

Methodology notes

• Valuation methodSum-of-the-parts valuation (SOTP)

  Value each business segment separately, then deduct group-level debt, liabilities, and discounts.

  The Pharmaceuticals business is valued at 7x 2027 underlying EBITDA, the Consumer Health business at 11.8x, and the Crop Science business by reference to Corteva’s valuation; net debt, litigation-related liabilities, and Apollo minority interests are then deducted, and a 10% conglomerate discount is applied, resulting in €61 per share.

• Relative valuationComparable-company multiples method

  Use peer 2027E enterprise value to underlying EBITDA multiples as the valuation benchmark.

  The 7x valuation for the Pharmaceuticals business represents a 33% discount to the 10.5x level for large European pharmaceutical companies; the Consumer Health business is benchmarked against Haleon and Kenvue, and the Crop Science business against Corteva. The report shows Crop Science multiples of 11.8x and 12.2x in different sections, so the original valuation table should be checked when using them.

• Risk adjustmentLegal liability and conglomerate discount adjustment

  Incorporate unresolved legal liabilities, cash outflows, and the diversified conglomerate discount into the equity value calculation.

  The valuation includes approximately €30bn of net debt at year-end 2027, approximately €5bn of remaining legal liabilities, approximately €6bn of legal cash outflows already included in net debt, a 10% conglomerate discount, and Apollo’s €3bn non-controlling interest in the long-acting reversible contraception business.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Bayer (BAYGN.DE)

  The main covered company in the report; Overweight rating maintained and target price raised.

  Strengths

  The new pharmaceutical product portfolio is gradually ramping up, and the impact of patent expiries on older products is expected to weaken; Crop Science restructuring and the new product cycle support growth; visibility on the glyphosate litigation settlement has improved.

  Weaknesses

  The group structure is complex, net debt and legal liabilities are high, free cash flow is under pressure in 2026, and the Pharmaceuticals business still faces erosion from generics and biosimilars.

  Comparison

  The Pharmaceuticals business is expected to deliver an underlying EBITDA CAGR of about 10% in 2027–2030, roughly twice the approximately 5% growth rate of the European pharmaceuticals industry, but its valuation still trades at a 33% discount to the industry.

  Risks

  Delayed settlement or higher costs for litigation, weaker-than-expected ramp-up of new Crop Science products, declines in soft commodity prices, and a greater-than-expected impact on Eylea from biosimilars.

• Corteva (CTVA.US)

  The main comparable company and valuation reference for Bayer’s Crop Science business.

  Strengths

  Its business is focused on agricultural inputs, and the market valuation assigned to it can serve as a benchmark for the Crop Science segment.

  Weaknesses

  The market expectations cited in the report show its 2027–2030 sales and underlying EBITDA growth below the forecasts for Bayer’s Crop Science business.

  Comparison

  Bayer’s Crop Science business is expected to deliver sales and underlying EBITDA CAGRs of about 5% and 10%, respectively, over the same period, higher than Corteva’s expected approximately 3% and 5%.

  Risks

  The agricultural cycle, soft commodity prices, and the pace of new product commercialization will all affect the effectiveness of comparable valuation.

Key data

• Target price€61.00The target horizon is December 2027, and the previous target price was €50.00.
• Current price and potential upside€48.32; 27%Current price as of August 4, 2026.
• Medium-term forecast revisionsSales raised by about 1%; underlying EBITDA raised by 1%–3%Covers the 2026–2030 forecast period.
• Pharmaceuticals business growthSales CAGR of about 5% in 2027–2030, underlying EBITDA CAGR of about 10%Underlying EBITDA margin is expected to be about 28% in 2030.
• Contribution from new pharmaceutical productsAbout €1.9bn of incremental sales in 2027Mainly from Nubeqa, Kerendia, Beyonttra, Lynkuet, and asundexian.
• Crop Science growthSales CAGR of about 5% in 2027–2030, underlying EBITDA CAGR of about 10%Higher than the market expectations cited in the report for Corteva over the same period, at about 3% for sales and about 5% for underlying EBITDA.
• Group financial forecasts2026 revenue of €46.038bn and underlying EBITDA of €9.636bn; 2027 revenue of €47.425bn and underlying EBITDA of €10.186bnUnderlying EBITDA is expected to grow 5.7% year on year in 2027.
• Leverage changeNet debt to EBITDA declines from 3.0x in 2026 to 2.1x in 2028Deleveraging depends on the recovery of operating cash flow and the controllability of legal cash expenditures.

Impact & implications

If the glyphosate settlement proceeds smoothly, the valuation overhang on Bayer will weaken significantly, and the market may shift toward pricing the ramp-up of new pharmaceutical products, Crop Science growth, and margin improvement. Underlying EBITDA growth in both the Pharmaceuticals and Crop Science businesses is expected to exceed that of relevant peers, while current segment valuations remain at a clear discount, creating the possibility of simultaneous valuation and earnings recovery. However, the target price is highly dependent on litigation liabilities not expanding further, new products being commercialized as planned, and improvements in cash flow and leverage.

Risks

• Launch and ramp-up of Preceon Corn and Vyconic Soy are slower than expected, which could lead to downward revisions to Crop Science forecasts.
• Soft commodity prices in 2026 are lower than expected, which could depress farmer spending and Crop Science revenue.
• Eylea is hit harder than expected by biosimilars, which could lead to downward revisions to Pharmaceuticals revenue forecasts.
• The glyphosate settlement fails to be completed as planned, the number of plaintiffs participating in the settlement is insufficient, or final legal costs increase.
• High net debt, legal cash expenditures, and pressure on free cash flow in 2026 could delay deleveraging.
• Approval, launch, or commercialization performance of new pharmaceutical products falls short of expectations, failing to fully offset the decline in mature products.

What to watch

• The fairness hearing for the glyphosate class-action settlement on August 19, 2026, and the proportion of opt-out plaintiffs rejoining the settlement.
• The Crop Science investor event to be held in Iowa on September 2, 2026.
• Third-quarter results to be released on November 3, 2026.
• Sales ramp-up and approval progress for Nubeqa, Kerendia, Beyonttra, Lynkuet, and asundexian.
• The commercialization pace of Preceon Corn and Vyconic Soy and the benefits from Crop Science restructuring.
• Legal cash expenditures, recovery of free cash flow, and progress in reducing the net debt to EBITDA ratio.