Analyst Note| Damien Conover, CFA |
Bayer reported fourth-quarter results largely in line with our expectations, and we don’t expect any major changes to our fair value estimate. We continue to view Bayer as undervalued with the market likely ascribing too much valuation pressure from the ongoing glyphosate litigation and the upcoming patent loss on cardiovascular drug Xarelto. We expect the proposed settlement of close to $10 billion will largely address the glyphosate cases, but we continue to assign the firm a high uncertainty rating, partly due to wider potential litigation outcomes. Also, while the 2023 Xarelto patent loss will likely create growth challenges following generic launches, an increasingly strong new line up of drugs should mitigate pressure and support our wide moat rating.