At the beginning of 2024, many investors - myself among them - saw Bayer as an opportunity that seemed reasonable. The company was facing obvious stock market punishment after years of litigation in the United States over Monsanto's legacy products, but its size, diversification and historical role in the pharmaceutical and agricultural sectors suggested that the market had overreacted. I bought shares at around 35 euros, convinced that the situation, although delicate, would be manageable.
As the months went by, it became clear that it would not be so simple. The Roundup herbicide lawsuits turned out to be more numerous, more complex and much more costly than most anticipated. Bayer had to spend billions in settlements and extend provisions on several occasions, raising doubts about its ability to contain the problem. Each unfavorable ruling resulted in further falls in the share price, and the stock became more dependent on the U.S. courts than on the performance of its business.
However, Bayer has an uncanny ability to make up ground at seemingly decisive moments. In recent months, the picture has changed slightly: the U.S. government backed a Supreme Court review of the approach to litigation, and that possibility opened the door to a reduction in the future legal impact. The effect on the stock market was immediate. The mere expectation that the liabilities could be reinterpreted, limited or revised has restored an air of optimism that the company had not seen for some time.
However, this upturn raises an essential question: is this a turnaround or just a temporary relief? The figures continue to remind us that the problem has not been solved. Bayer is still facing a considerable number of lawsuits and, although its core businesses continue to generate solid revenues, the legal burden remains the main factor affecting its stock market valuation.
For those of us who bought into the stock in 2024, the current situation invites calm reflection. After a period marked by constant upheavals and judicial news, taking advantage of the upturn to consolidate gains does not seem a hasty decision, but rather an exercise in order and investment discipline. Bayer could make progress if the Supreme Court offers a more favorable framework, but it is also true that any turn in the opposite direction could reactivate the volatility that has characterized the stock in recent years.
It is worth noting that Bayer continues to occupy a relevant position in two strategic sectors: pharmaceuticals and agriculture. Its products have a global presence and its revenue-generating capacity remains high, even in a challenging environment. But the company operates under extraordinary pressure, where every regulatory or judicial development can change investors' expectations in a matter of days.
My impression is that the company will continue to move in a tricky range, where legal developments will coexist with lingering doubts. It is a stock that can offer rewards, but requires a risk tolerance that not all investors are willing to maintain. Sometimes, exiting with a profit after such an unstable period is simply a good way to close.
Bayer is moving forward, but still under the shadow of its own litigation. And for many, that shadow outweighs any stock market rally.
