Bayer is a diversified German life sciences company and offers an excellent long-term story for investors.
Short-term (1 year), the upside of the share price appears to be limited until the glyphosate case is being resolved. Crop-science demand is robust and we expect positive earnings revisions in 2022. Bayer is a pure value stock trading at a significant discount to peers on PE. The pharma pipeline, which is almost not considered for its sum-of-parts valuation, has few imminent catalysts, but the segment could surprise to the positive.
The valuation is cheap and should benefit from deleveraging over time. The shares are an excellent medium-to-long term opportunity. Target payout ratio corridor of between 30% to 40%. Core earnings per share form the basis of the dividend policy. A significant re-rating could take place at any time.