Is Now the Right Time to Consider Bayer After 45% Rally in 2025?

If you have ever wondered whether now is the time to jump into Bayer stock or wait it out, you are not alone. Bayer has been nothing short of a roller coaster ride for investors. Over the last five years, shares have lost over 40%, a slide that has certainly tested the patience of long-term holders. But zooming in, there is a fresh sense of momentum brewing. The stock is up nearly 10% in the last month, and year to date, it is sitting on an impressive 45.7% gain. The one-year return is still in the red at -1%, but this performance piques curiosity, especially for anyone looking for a turnaround story with substance.

Much of the recent price action has to do with changing investor sentiment around Bayer's ongoing legal and restructuring challenges, as well as broader market shifts that have favored select European healthcare and agrochemical companies. While the shadow of Bayer’s past missteps still lingers, investors seem to be recalibrating their expectations and reassessing the company's risk profile.

So, what about valuation? If you are crunching the numbers, Bayer currently clocks in with a value score of 5. This means the company checks the box for being undervalued in five out of six major metrics. That is not just encouraging; it is enough to get any value-minded investor’s attention.

Let us break down those valuation methods next. Stick around because there is an even more insightful way to look at Bayer’s true worth that we will get to by the end of this article.

Bayer delivered -1.0% returns over the last year. See how this stacks up to the rest of the Pharmaceuticals industry.

Approach 1: Bayer Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and then discounting them back to their value today. This approach is especially useful for businesses with steady, predictable cash generation, such as Bayer.

For Bayer, the most recent reported Free Cash Flow (FCF) stands at €4.41 billion. Analyst projections suggest gradual increases, with FCF expected to reach €5.01 billion by 2029. Although estimates beyond five years combine analyst input with Simply Wall St's own extrapolations, the company’s cash flows are forecasted to remain robust and improve steadily over the next decade.

Based on this two-stage method of projecting and discounting cash flows, the intrinsic value per share of Bayer stock is estimated at approximately €145.83. According to this model, the stock’s current trading price suggests it is undervalued by about 80.6% at present.

In summary, the DCF model indicates that Bayer’s shares are trading well below their estimated true worth, primarily driven by strong cash flow forecasts over time.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bayer.

Our Discounted Cash Flow (DCF) analysis suggests Bayer is undervalued by 80.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Bayer Price vs Sales

The Price-to-Sales (P/S) ratio is often the preferred metric for valuing companies like Bayer. This is especially true for firms operating in industries where profits might be volatile due to restructuring or legal costs, but topline revenue remains consistent. The P/S ratio gives investors a clear snapshot of how much they are paying for every euro of a company’s sales, making it a particularly suitable valuation tool when net income is temporarily impacted.

Growth expectations and risk levels influence what a “normal” or “fair” P/S ratio should be. Companies with solid revenue growth and lower perceived risks typically warrant a higher multiple, while those facing headwinds or uncertainties tend to trade at lower ratios. The P/S can therefore provide a useful pulse of investor sentiment and future expectations.

Bayer currently trades at a P/S ratio of 0.60x, which stands out compared to the peer group average of 1.91x and the pharmaceuticals industry average of 2.83x. These numbers suggest that Bayer’s shares are valued far more conservatively than many of its competitors. To go a step further, Simply Wall St calculates a proprietary “Fair Ratio” for Bayer, which in this case is 1.53x. The Fair Ratio incorporates not just industry comparisons, but also factors such as Bayer’s growth prospects, profit margins, market capitalization, and unique risk profile. This tailored approach is more nuanced than a simple peer or industry average because it recognizes Bayer's individual business dynamics.

With Bayer's actual P/S ratio of 0.60x significantly below the Fair Ratio of 1.53x, the stock currently appears undervalued based on this metric.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Bayer Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. At its core, a Narrative is simply your personal story about a company, tying together your own perspective on what is likely to happen next, along with your forecasts for its financials and what you think is a fair price.

Rather than relying only on fixed models or analyst targets, Narratives let you connect the company's journey to your own assumptions for things like revenue growth, margin trends, or risk factors, and show exactly how those beliefs flow through to a fair value today. Narratives are easy to create, adjust, and share on Simply Wall St’s Community page, where millions of investors use them every day to make smarter buy-or-sell decisions.

Crucially, each Narrative is dynamic, automatically updating when new news, results, or market changes come in, so your perspective always reflects the latest information. For example, some Bayer investors might use a bullish Narrative, assuming strong margin recovery and new pharma launches, arriving at a fair value as high as €39.0. More cautious users, focused on litigation risks and regulatory headwinds, might see fair value closer to €23.0. Narratives give you the tools to map your view to actual numbers, helping you decide whether Bayer is genuinely an opportunity, and ensuring your investment story is always up to date and actionable.

Do you think there's more to the story for Bayer? Create your own Narrative to let the Community know!

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com