Bayer BAYN.DE
What does Bayer do?
Bayer is a globally active life sciences group headquartered in Leverkusen with three divisions: Pharmaceuticals, Consumer Health and Crop Science. The pharmaceuticals business develops and markets prescription drugs, mainly in cardiovascular diseases and women's health, supplemented by oncology, hematology and ophthalmology, as well as diagnostic imaging, contrast agents and cell and gene therapy. Customers are physicians, hospitals, pharmacies and healthcare systems.
Consumer Health offers over-the-counter medicines and nutritional supplements, for example for allergies, colds, pain and skin problems, and sells through pharmacies and retail. Crop Science supplies seeds, plant traits and crop protection products to farms and is one of the largest providers worldwide. Bayer competes with large pharmaceutical groups, providers of over-the-counter health products, and agrochemical and seed companies. Its strength lies in a broad footprint and established brands, which also bring high complexity.
Score profile
Rank vs. Drug Manufacturers - General (15 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, Bayer ranks in the bottom fifth in the group Drug Manufacturers - General (0.8/10). On growth, the company ranks in the middle in the group Drug Manufacturers - General (5.1/10). On valuation (higher = cheaper), the stock ranks above average in the group Drug Manufacturers - General (6.5/10). On financial strength, Bayer ranks in the middle in the group Drug Manufacturers - General (5.1/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 11.8x | 16.4x | better than 77 % |
| PEG ratio | 4.7x | 3.3x | better than 18 % |
| EV/EBITDA | 7.8x | 13.4x | better than 83 % |
| Price/sales | 1.2x | 4.4x | better than 83 % |
| Price/book | 1.9x | 6.8x | better than 89 % |
| Revenue growth | 4.1% | 5.6% | better than 30 % |
| Earnings growth | 0.0% | -5.3% | better than 71 % |
| Gross margin | 59.4% | 74.2% | better than 10 % |
| Operating margin | -1.1% | 34.3% | better than 3 % |
| Net margin | -3.2% | 15.7% | better than 10 % |
| Return on equity | -4.6% | 20.0% | better than 10 % |
| Debt/equity | 134.4% | 119.9% | better than 30 % |
| Current ratio | 1.4x | 1.4x | better than 40 % |
| Free cash flow yield | 10.4% | 4.4% | better than 83 % |
| Dividend yield | 0.2% | 2.2% | – |
| Payout ratio | 162.2% | 60.8% | – |
| Beta | 0.81 | 0.37 | – |
Valuation: what is Bayer worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give Bayer a model range of 79.00 EUR to 139.52 EUR per share.
18 analysts, average rating “Buy”, average price target 60.11 EUR (+5.3%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The success of patent-protected drugs and the pharmaceutical pipeline largely determine revenue and earnings.
- Demand for seeds and crop protection depends on agricultural prices, weather and farmers' income situation.
- Strong brands in over-the-counter products provide relatively stable, consumer-driven revenue independent of economic cycles.
Risks
- Litigation concerning glyphosate and other product liability issues may cause significant financial burdens and provisions.
- Patent expiries and generic competition put pressure on important pharmaceutical products, while research projects may fail.
- Regulatory requirements for crop protection products and price regulation in healthcare limit business opportunities and margins.
What to look for with Bayer
Net debt relative to operating earnings is meaningful, as legal risks and research spending weigh on the group's financial strength.