Bayer stock rating upgraded to Buy at BofA Securities

On Friday, BofA Securities analyst Sachin Jain changed the outlook on Bayer AG (ETR:BAYGN) (BAYN:GR) (OTC: BAYRY) stock from Neutral to Buy, increasing the price target to €30.00 from the previous €27.00. Currently trading at $6.47, Bayer (OTC:BAYRY)’s stock shows potential upside according to InvestingPro analysis, with analyst targets ranging from $7.16 to $10.60. The adjustment comes as Jain anticipates potential resolutions to issues that have affected Bayer’s stock performance, specifically concerning its product pipeline and ongoing litigation matters.

The upgrade is largely influenced by the prospects of asundexian, a drug currently in late-stage trials, with Phase III data expected in the fourth quarter of 2025. With annual revenue of $48.3 billion and an "GOOD" Financial Health score from InvestingPro, Bayer maintains its position as a prominent player in the pharmaceuticals industry. Jain’s analysis leads to an elevated peak sales estimate for asundexian of €3 billion, assigning a 40% probability of success. The anticipation of asundexian’s success is a key factor, as it is one of three major catalysts likely to shape investor discussions in the next 12 to 18 months.

According to Jain, positive developments in these ’binary’ events could significantly enhance Bayer’s net present value (NPV). The first event involves asundexian, where favorable trial data could potentially add approximately €6 billion to consensus NPV estimates by eliminating the need for risk adjustments. The second event is the Glyphosate Supreme Court of the United States review; a favorable ruling could negate the necessity for Bayer’s €6 billion provision. Lastly, the PCB Erickson review outcome is pending, for which BofA Securities has factored in an additional €5 billion litigation provision on top of Bayer’s current provision.

Jain’s assessment reflects optimism about the potential for strongly positive risk-reward scenarios for Bayer, as the company approaches key milestones that could lead to significant increases in its NPV. The financial institution’s revised price target and stock rating reflect confidence in Bayer’s ability to navigate its current challenges and capitalize on upcoming opportunities.

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