Bayer is the stock most people laugh at. I picked it up contrarian when it was trading below €25 due to Roundup litigation. My position of 6 shares now sits at +40.93% — €66.91 in absolute gains. And right now things get interesting: Q1 2026 delivered a 19% EPS beat, and this summer three catalysts could resolve — or cement — the entire Roundup risk.
Forward P/E at 9 — cheap for a pharma large-cap. Novartis, Roche, GSK trade at 12–14x. Bayer trades at a 30–40% discount to peers. But ROE of −12.5% means Bayer is structurally losing money on a last-twelve-months basis. FCF yield of 9.35% means the cash is coming in — it's just being consumed by litigation.
In 2018 Bayer acquired Monsanto for $63 billion. Three months after closing, the first Roundup verdict hits. Stock crashes from €100 to €50. Today: roughly 65,000 pending lawsuits in the US. Litigation reserves: €11.8 billion. Bayer has burned €13 billion of free cash flow on litigation over five years.
On February 19, 2024, CEO Bill Anderson announced the cut everyone feared: dividend reduced to 11 cents. For three years. Savings: €2.3 billion per year. In 2018 Bayer paid €2.80 per share — a DAX dividend aristocrat. My yield-on-cost at €27.25: a laughable 0.40%.
FY2025: €3.62 billion net loss — 41.8% worse than 2024. Operating margin minus 5.6%. Three consecutive years in the red. This is no temporary dip — this is a structural crisis that the market has already largely priced in.
| Date | Event | Significance |
|---|---|---|
| 04 Jun 2026 | Settlement Opt-out | Plaintiffs must accept $7.25B settlement or keep litigating |
| Late June 2026 | SCOTUS Ruling | Does federal pesticide law preempt state lawsuits? YES = 65,000 claims gone |
| 09 Jul 2026 | Final Approval Hearing | Settlement officially approved or sent back for renegotiation |
UBS mapped five scenarios: Worst case €35 (settlement fails + SCOTUS loss). Base case €52. Best case €60. Current price ~€38 — the market is pricing roughly 50/50.
Core EPS of €2.71 vs €2.28 expected — a 19% beat. EBITDA pre-special €4.45B, up 9%. Crop Science EBITDA +17.9%, soybean seeds doubled. The negative FCF comes almost entirely from €2.0B in litigation cash-out. If Roundup is resolved this summer, those €2B per quarter disappear from the P&L.
Strong (SCOTUS YES + Settlement approved): Re-rating to €52–60. Litigation risk falls away. Dividend increase from FY2027 possible. I'd be roughly 100% up on my entry.
Solid (Settlement approved, SCOTUS NO): State lawsuits continue. Stock sideways at €35–45. Deleveraging story intact but slower. I hold.
Weak (Settlement fails + SCOTUS NO): Back to €25–30. Painful, but my entry at €27.25 limits the downside. Below €25 a second buy could make sense.
Bayer is not a dividend investment — it's an asymmetric bet. Q1 2026 showed Anderson can deliver operationally. Three summer catalysts determine the rest. I hold my 6 shares and watch what SCOTUS says in late June. Adding before a directional decision isn't on my agenda.