Bayer's New CEO Holds Great Potential to Improve Drug Development

Bayer announced the appointment of Bill Anderson as CEO effective June 1. He will replace Werner Baumann, who has served as CEO for seven years. While we don’t expect any immediate changes to our fair value estimate based on the announcement, the change in leadership holds significant potential to increase the value of Bayer. We currently give Bayer a Capital Allocation Rating of Poor, largely because of the low and less effective spending in drug development and the poor handling of the Monsanto acquisition. With Anderson taking the helm, we expect a major positive shift in Bayer’s execution. While we don’t expect any immediate changes to our projections or Capital Allocation Rating, we believe Anderson’s strong background will greatly improve Bayer’s operations.