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Investing.com -- BofA Securities has raised its rating on Bayer (ETR:BAYGN) to “buy” from “neutral,” increasing its price objective to €30 from €27, citing improved expectations for the experimental stroke drug asundexian and the potential resolution of key litigation issues.
The brokerage sees more than 75% upside to the company’s net present value over the next 12 to 18 months if several positive developments materialize.
Central to the upgrade is a deep dive into asundexian, Bayer’s oral Factor XIa inhibitor, which is currently in a Phase III trial for secondary stroke prevention.
Results are expected in the fourth quarter of 2025. BofA now forecasts peak sales of €3 billion with a 40% probability of reaching market, up from the market consensus of €150 million. A successful outcome could add €6 billion to Bayer’s NPV, or roughly 30% upside.
BofA notes that the design of the ongoing trial differs from a previous failed study in atrial fibrillation, potentially lowering the hurdle for success.
The stroke trial targets a different patient group and uses standard antiplatelet therapy as a comparator rather than a direct-acting anticoagulant, which the analysts believes makes a positive outcome more attainable.
Despite previous concerns about bleeding risk, earlier subgroup data suggested a net clinical benefit in patients with atherosclerosis.
In addition to asundexian, Bayer faces two major legal events that could significantly affect its valuation.
The U.S. Supreme Court is expected to decide by late 2025 or early 2026 whether to review a glyphosate case.
If the court rules in Bayer’s favor, the company could reverse a €6 billion provision related to the litigation.
Separately, a ruling in the Washington State Erickson PCB case could eliminate another €5 billion in potential liabilities.
Bayer’s share price has declined about 70% since mid-2022, tracking a halving of earnings estimates for 2026, which have fallen from around €9 to under €5 per share.
However, BofA highlights that earnings have stabilized in recent months and sees that trend continuing, supported by potential upside from pipeline developments and litigation outcomes.
At a forward P/E of 4.8x for 2026 and a free cash flow yield exceeding 20% in outer years, Bayer’s valuation is seen as compelling.
The brokerage also notes Bayer’s limited exposure to potential U.S. pharmaceutical tariffs and views the investment case as increasingly favorable as legal risks begin to clear.