Bayer: Pulling Out of an 8-Year DipApr 26, 2022
It has not been a great 15 years being a Bayer stockholder. After hitting all-time highs in 2014, the executive team shot for the fences with a blockbuster $66 Billion acquisition of crop science juggernaut Monsanto.
When they started pushing for the acquisition in the early 2010s, it made a lot of sense. Bayer is a powerhouse in the pharma business, while Monsanto was the new king of crops and agricultural chemicals. Basically, both companies exist to find new and interesting ways to make chemicals for either sick people or sick crops.
But by the time Bayer pull the trigger, a LOT of consolidation had happened in the world of agri-business (thanks 2008 crash), which made Monsanto more and more expensive. So when the ink dried on the deal in 2018, the market decided it was way too expensive.
And then Bayer got hit with litigation from the German government over monopoly risks — and THEN Monsanto got hit with wave after wave of lawsuits based on personal injury suffered by some of the folks at the hands of their pesticides.
The result ended up being that Bayer shed just north of 40% of its stock value over the last 5 years—stabilizing at about $12/share. But the world of pharma and agribusiness work on very long cycles.
And even though we’re experiencing 40-year highs for inflation and watching valuations get compressed, the long winter for their agribusiness appears to finally be ending.
Ever since reporting solid 2021 results, Bayer has gone on a tear that shows no signs of slowing down. Market forces on both sides of Bayer's business are starting to move their way. With a blockbuster heart medication entering final medical trials and fertilizer/crop prices rising across the board, Bayer is about to soar through Q2 and shift market sentiment back in its favor.
But what is the stock's upside?
When will this occur?
And what are the key details you can't miss?