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Bayer AG BAYRY

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Court Denies Bayer's Glyphosate Class-Action Settlement, but New Strategy Holds Similar Outlook

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

In reaction to a court’s denial for the glyphosate class-action settlement, Bayer is likely moving forward with most elements of the settlement, with exceptions around future cases. With the situation looking fairly similar with or without the class-action approval, we don’t expect any change to our fair value estimate. A challenge in the class action centered on the path forward for future glyphosate claims, but we had viewed these cases with uncertainty even within the class action. As a result of the denial of the class action, we view these future claims with a similar level of uncertainty, which supports our high uncertainty rating for the stock that includes a bear case with significantly higher legal costs. While we expect continued payments beyond the close to $10 billion already established for the majority of the current cases, we believe Bayer remains well positioned to deal with the legal costs while funding the innovation needed to maintain its wide moat.

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Company Profile

Business Description

Bayer is a German healthcare and agriculture conglomerate. Healthcare provides just over half of the company's sales and includes pharmaceutical drugs as well as vitamins. The company has a crop science business that includes seeds, pesticides, herbicides, and fungicides, which was expanded through the acquisition of Monsanto.

Contact
Kaiser-Wilhelm-Allee 1
Leverkusen, 51368, Germany
T +49 214301
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 106,092

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