UBS has moved Bayer from a neutral stance to a buy recommendation and raised its 12-month price objective to €52 from €48, citing legal developments in the company’s long-running glyphosate litigation and a recent pullback in Bayer shares of about 15% over the prior month. The upgrade coincided with shares rising just over 3% on the news.
The bank highlighted a March 4 court decision that granted preliminary approval to Bayer’s proposed $7.25 billion settlement for glyphosate claims. Under the timetable tied to that approval, plaintiffs have until June 4 to opt out of the deal - a deadline that precedes an anticipated U.S. Supreme Court decision on the Durnell glyphosate case expected by the end of June.
UBS noted that U.S. Supreme Court oral arguments are scheduled for April 27 and that a Fairness Hearing to consider final approval of the settlement is set for July 9. The firm emphasized that the roughly 90-day opt-out window is shorter than it had expected and suggested the compressed timetable may encourage more plaintiffs to remain opted in to the settlement.
To capture the range of possible legal and financial outcomes, UBS modelled five theoretical scenarios that produce per-share valuations spanning from €35 to €60. Its central or base case aligns with a €52 valuation and applies a 25% conglomerate discount. The downside case sits at €35 - a level UBS says reflects a 50% discount to value in a situation where the settlement collapses and Bayer loses at the Supreme Court; that downside represents a 13% decline from the March 11 price of €40 cited in the bank’s analysis. The upside scenario projects a €60 per-share value assuming a 20% conglomerate discount plus a €4.8 billion reduction in net debt.
Bayer has publicly stated it needs "very close to 100%" of plaintiffs to remain opted in for the company to proceed with the settlement, a threshold UBS referenced when discussing settlement mechanics and execution risk. On the Supreme Court dynamics, UBS highlighted the U.S. Solicitor General’s brief as favorable to Bayer and pointed to the court’s historical long-run reversal rate of about 70% for cases it agrees to hear.
UBS provided a business-segment valuation that places Pharma at €45.27 billion using a 0.9x NPV multiple, Crop Science at €48.47 billion and Consumer Health at €13.41 billion. Those segment valuations sum to an enterprise value of €107.16 billion. Folding in projected 2026 net debt of €43.88 billion and applying a 25% conglomerate discount produces a per-share value of €48.3; UBS then arrives at its €52 target after applying a 7% cost of equity and including a €0.50 dividend.
On specific product forecasts, UBS raised its peak sales estimate for Nubeqa to $6 billion from $5.7 billion after Bayer provided guidance for roughly 50% year-on-year net sales growth for the drug in 2026. The bank expects Pharma sales to grow at an approximate compound annual growth rate of 4% from 2025 through 2030.
For 2026 UBS projects group revenues of €45,140 million, earnings per share of €4.42, and net debt of €32,420 million. Based on its forecasts, Bayer would trade at a 2026 price-to-earnings ratio of 8.7x, which UBS notes is a 37% discount to European pharma peers with a peer average P/E of 14.1x. UBS’s modeled 12-month total return for the stock is 36.2%.
Key points
- UBS upgraded Bayer to buy and raised its 12-month target to €52, citing a preliminary court approval of a $7.25 billion glyphosate settlement and a compressed opt-out timeline that could encourage plaintiff participation.
- The bank modelled five valuation scenarios from €35 to €60, with a €52 base case assuming a 25% conglomerate discount and an upside case that factors in €4.8 billion of net debt reduction.
- UBS revised product and financial forecasts, raising Nubeqa peak sales to $6 billion and projecting 2026 revenues of €45,140 million and EPS of €4.42, while noting Bayer’s 2026 P/E would trade at a discount to peers.
Risks and uncertainties
- The settlement could fail to hold - UBS’s downside scenario assumes settlement collapse and an adverse Supreme Court outcome, which would materially reduce valuation and affect equities and legal exposure for the company.
- Bayer’s stated need for nearly unanimous plaintiff retention to proceed introduces execution risk; if a significant number of plaintiffs opt out, the settlement dynamics and projected cash flows would change, influencing the pharmaceutical and wider equities markets.
- Timing risks around the Supreme Court decision and associated hearings - including the April 27 oral arguments and the July 9 Fairness Hearing - create uncertainty in market reaction and valuation realization for Bayer and related sectors.