Bayer Stock Offers Upside as Operational Recovery Outpaces Litigation Fears: Analyst

mwb Research has reiterated its Buy rating on Bayer (ETR: BAYN) with an unchanged price target of 52 euros, arguing the German pharmaceutical and agricultural sciences company’s improving operational performance makes current valuations excessively punitive.

Analyst Abed Jarad said first-quarter results showed a solid start to fiscal 2026, with group sales rising 4.1% on a currency and portfolio-adjusted basis and EBITDA before special items climbing 9.0% year-over-year to 4.45 billion euros, which is ahead of the trajectory implied by full-year guidance. Core earnings per share rose 12.9% to 2.71 euros despite a foreign exchange headwind of approximately 0.20 euros.

Free cash flow deteriorated to negative 2.3 billion euros from negative 1.5 billion euros a year earlier, driven by litigation-related outflows of approximately 2.0 billion euros tied to glyphosate and PCB settlements, pushing net debt to 32.5 billion euros. Adjusted for those legal payments, mwb Research said underlying free cash flow improved materially.

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The analyst said “litigation remains the central equity overhang,” with key settlement and pre-emption milestones still ahead.

However, with operational execution tracking ahead of expectations, particularly in Crop Science, where Seeds and Traits strength, disciplined cost management and favorable mix drove margin expansion, mwb Research said the market is “overly discounting these risks.”

Pharmaceuticals are said to remain a transition story, with Nubeqa and Kerendia continuing to scale against Xarelto patent cliff pressure and Eylea biosimilar headwinds. Consumer Health delivered steady underlying growth.