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Is Bayer (XTRA:BAYN) Undervalued As FDA Accepts KERENDIA Filing?

Simply Wall St · 1d ago

Bayer (XTRA:BAYN) is back in focus after the FDA accepted its supplemental New Drug Application for KERENDIA in chronic kidney disease patients without diabetes, supported by positive Phase III FIND-CKD trial data.

Recent moves in Bayer’s share price tell a mixed story. The 1 month share price return is down 8.35% and the 3 month share price return is down 7.46%, yet year to date the share price return is 16.18% and the 1 year total shareholder return is 62.01%. This suggests that earlier optimism is now being tested, even as new approvals like the KERENDIA filing keep the long term narrative in play.

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Bayer now trades at a hefty discount to both analyst targets and many intrinsic value estimates. Given the recent share pullback and ongoing legal and earnings risks, is that caution misplaced or entirely rational?

Most Popular Narrative: 24% Undervalued

Bayer’s most followed narrative pegs fair value at €58.22 per share, well above the last close at €44.15, which frames the recent pullback as a valuation gap rather than just sentiment noise.

The main thing that has to go right is that Bayer converts its Crop Science and pharma programs, including the 2024 to 2029 efficiency framework and the AI and data driven R&D engine, into higher quality earnings and sustained free cash flow while containing litigation and capital spending pressures.

See why 160 investors see Bayer as 24% undervalued.

The fair value in this narrative is built using a 5.5% discount rate and assumes Bayer can lift profit margins from current loss making levels toward a 7.6% margin while growing revenue at a low single digit rate. That combination underpins a fair value estimate of €58.22 per share, which sits meaningfully above both the latest close and the analyst consensus discount of around 24%.

For you as an investor, that leaves a clear tension between market caution and a thesis that leans on execution in Crop Science, new pharmaceuticals like KERENDIA and better cash conversion as litigation spend normalises. The key question is whether you think Bayer can move from a reported net loss of €1.7b toward the €3.7b earnings level analysts are using in their 2029 scenarios without eroding the balance sheet further through funding and payouts.

Result: Fair Value of €58.22 (UNDERVALUED)

Still, Bayer’s narrative can break if litigation cash outflows remain heavy, or if Crop Science restructuring delivers slower savings and ongoing operational disruption.

Find out about the key risks to this Bayer narrative.

Next Steps

If the tone of this Bayer story feels cautiously optimistic, consider reviewing the hard numbers yourself. To see which potential upsides investors are focused on, review the 4 key rewards.

Looking for more Bayer investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.