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MarketScreener Homepage  >  Equities  >  Xetra  >  Bayer AG    BAYN   DE000BAY0017

BAYER AG

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Bayer : Shares Resume Fall After Roundup Payout Tops $2 Billion

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05/14/2019 | 06:10am EDT

By Ruth Bender

BERLIN--Bayer AG (BAYN.XE) shares resumed their months-long fall on Tuesday after the company was hit by a more-than $2 billion jury award over its Roundup herbicide, marking a sharp escalation in the chemical and drug giant's legal woes.

The shares were off 2.7% around midday--the worst performer in the Frankfurt stock exchange's blue-chip DAX index--after hitting a new seven-year low earlier following Bayer's third Roundup court defeat in 10 months. A California jury on Monday awarded $2.055 billion to a couple who blamed the weedkiller for causing their cancer--up sharply from the two-digit million figures Bayer is facing in the previous cases.

The verdict overshadowed the first positive news from Bayer in weeks. On Monday, the company said it had reached an agreement to sell its Coppertone sunscreens for $550 million, the first of a series of emergency restructuring measures Bayer plotted late last year in an effort to convince increasingly skeptical investors that it has its drugs-to-crops business under control.

In the absence of a court win so far, Bayer has been stuck in a downward spiral, with each new verdict against it pushing its stock lower, as shareholders struggle to compute the total scale of the company's potential liabilities surrounding Roundup.

"Sentiment is stuck in the mud," said Citi analyst Peter Verdult, who is now pinning his hopes on the next Roundup trial in St. Louis, which will be the first to take place outside the San Francisco Bay Area, often seen as an unfavorable setting for corporate defendants.

"A positive development of the group's business probably won't have an effect on valuation in the short term," analysts from DZ Bank wrote.

Bayer is appealing all verdicts. The company argues Roundup and its active ingredient glyphosate are safe to use. Bayer hopes to win on appeal, where judges will look over the cases.

After the first verdict, Bayer obtained a substantial reduction in the amount of the award and analysts were optimistic Tuesday that this week's $2 billion award would be reduced too, as is often the case in such litigation.

Gunther Zechmann from Bernstein said he expected Monday's award, which included $2 billion in punitive damages, to end up at $110 million.

Still, the eye-popping amount granted by the jury this week could make the 13,400 total plaintiffs Bayer faces at its latest count hesitant to settle "given the prize available through winning their case," Mr. Zechmann said.

Some investors would like to see Bayer settle sooner rather than later to reach more clarity over the future of the company.

Write to Ruth Bender at ruth.bender@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BAYER AG -0.04% 55.32 Delayed Quote.-8.65%
DAX -0.38% 12228.44 Delayed Quote.15.81%
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Financials (€)
Sales 2019 46 540 M
EBIT 2019 8 175 M
Net income 2019 3 479 M
Debt 2019 37 729 M
Yield 2019 5,19%
P/E ratio 2019 14,59
P/E ratio 2020 11,87
EV / Sales 2019 1,92x
EV / Sales 2020 1,80x
Capitalization 51 607 M
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 77,3 €
Spread / Average Target 40%
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Managers
NameTitle
Werner Baumann Chairman-Management Board
Werner Wenning Chairman-Supervisory Board
Wolfgang U. Nickl Chief Financial Officer
Katharina Jansen Head-Science & Research
Hartmut Klusik Head-Human Resources, Technology & Sustainability
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