(News Bulletin 247) – Berenberg announced on Wednesday that it had reduced its advice on Bayer shares from ‘buy’ to ‘hold’, with a price target lowered from 66 to 60 euros.
In his note, Berenberg believes that Bill Anderson, the new chief executive, showed ‘disarming sincerity’ in describing the problems faced by the chemical and pharmaceutical group recently, namely its numerous ongoing litigations, a too big bureaucracy and too much debt.
The broker is however delighted that the business leader has, unlike his predecessors, raised the possible scenario of a split, which he believes could begin to materialize next year.
If he considers a dismantling ‘probable’, Berenberg underlines that the title is still traded on the basis of an enterprise value / EBITDA ratio of 9x, a level which he considers excessive for a group which should have according to him struggling to grow its bottom line over the next two years due to patent losses and falling commodity prices.
He also says he is ‘uninspired’ by the unconvincing results displayed so far by the company in its trials relating to the PCB.
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