Bayer Share Plummets: Historic Price Drop Following Two Disastrous Announcements

Last Updated: 22. November 2023By

It was a pitch-black start to the week for the Leverkusen Bayer Corporation: Two pieces of bad news caused the share price to crash on Monday. The rate fell by almost a fifth over the course of trading – the steepest drop in more than three decades.

Clinical study aborted – hope-bringer down the drain? The background was primarily the premature termination of a clinical study on the anticoagulant Asundexian. The medication was already in Phase III of the study and was considered a lucrative hope-bringer in the pipeline. Now the project has been stopped due to poor effectiveness, at least with regard to its use as an anticoagulant. Another Phase III study with the active ingredient for stroke prevention, however, is currently still underway.

Bayer had originally targeted the introduction of the medication for 2026 and expected annual sales of around 5 billion euros. Asundexian was seen as a hope-bringer for the pharmaceutical division, as two important patents will expire in the coming years and rip a hole in the company coffers.

New Monsanto ruling additionally hits the stomach This is no longer as full as in previous times. With the acquisition of the US fertilizer manufacturer Monsanto, the Leverkusen people have brought a massive problem into their house: Glyphosate. Numerous US lawsuits against the allegedly carcinogenic agent are still pending. Last week, Bayer suffered another legal defeat in the US state of Missouri: A court awarded three plaintiffs damages of over 1.5 billion dollars, which Monsanto – i.e. Bayer – has to pay.

The company, as expected, announced that it would appeal the verdict. This legal duel continues into the next round. It hardly matters anymore that glyphosate was almost simultaneously approved for another 10 years in Europe, which was actually good news from the company’s point of view.

Negative double whammy from Leverkusen For legal disputes in the US, Bayer has set aside a total of around 16 billion dollars. Critics – and many investors – had already expressed doubts during the takeover of Monsanto in 2018 whether the 63-billion-dollar acquisition was really a good thing. So far, the answer is no.

Investors immediately reacted to the negative double-whammy: Bad news in both the agricultural and pharmaceutical divisions meant that they dropped the Bayer share price on Monday like a hot potato. With less than 33 euros, the paper momentarily fell to its lowest level since 2006.

Analysts horrified by study abandonment While investors and analysts are used to a lot in terms of glyphosate and often managed to significantly reduce subsequent damages afterwards, they were taken by surprise by the stop of the Asundexian study.

So numerous experts reacted horrified to the news and lowered their thumbs for the Bayer stock. The British Barclays Bank, for example, significantly reduced the target price from 65 to 40 euros and cancelled the buy recommendation, new rating: equal weight. Also, the analysis house Jefferies stepped down from β€œbuy” to β€œhold” and similarly drastically reduced the target price from 60 to 37 euros.

Opportunity or falling knife? Other analysts are currently less pessimistic. DZ Bank now assumes a target price of 56 euros, after previously 59 euros, but confirmed the buy recommendation. Other experts not only kept their buy recommendation, but also the respective target price for Bayer shares, including the Swiss UBS (90 euros) or the analysis house Bernstein Research (60 euros).

Whether the current share price plunge is now a good buying opportunity or a falling knife from which investors should keep their fingers away, opinions differ. On Tuesday, however, the paper was unable to make any significant recovery: it did not go any further downhill, but not really uphill either. Rather, the price continued to oscillate around the closing mark from Monday of around 34 euros.