mwb Research reiterated its Buy rating and €52.00 price target on Bayer AG (ETR: BAYN) after a U.S. legal developments added fresh uncertainty to the German drugmaker’s already litigation-heavy equity story, analyst Abed Jarad said.
Bayer’s stock closed Tuesday’s session at €34.10, implying strong upside to mwb Research’s target.
Two legal fronts emerged in recent days. On May 27, Iowa-based seed company Latham Quality filed a proposed class action accusing Bayer of monopolizing the U.S. GMO corn seed market following the expiration of its NK603 Roundup-resistant trait patent in 2022. Bayer has rejected the claims.
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Separately, objectors are seeking to move Bayer’s proposed $7.25 billion Roundup settlement from Missouri state court to federal court, arguing the deal was the product of collusion between Bayer and class counsel. Bayer and class counsel have defended the settlement as fair.
mwb Research said the developments were unhelpful but not estimate-changing. “The headlines are clearly unhelpful and may keep the shares volatile near term, but they do not change our base case or estimates at this stage,” Jarad wrote.
The firm cited improving operational performance as a key support for its thesis. “Crop Science [is] showing better execution despite a difficult sector environment and Pharma launch assets continuing to build credibility as offsets to legacy erosion,” Jarad noted.
mwb Research believes Bayer’s valuation already reflects a meaningful litigation discount and that the risk/reward remains attractive. “We continue to see the risk/reward as attractive and reiterate our BUY rating and EUR 52.00 price target,” Jarad concluded.
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