Analyst Note
| Damien Conover, CFA |Largely buoyed by excellent crop science growth, Bayer reported strong first-quarter results ahead of our expectations, but we don’t expect any major changes to our fair value estimate as we believe the favorable pricing driving the strong performance in the quarter will fade later in the year. Nevertheless, we continue to view the stock as undervalued, with the market underappreciating the firm’s growth potential through patent losses and overly concerned about the glyphosate litigation. Bayer has already taken reserves to cover the downside in the glyphosate legal process, and we don’t see much more negative pressure; if the Solicitor General input to the Supreme Court is favorable, we could see less legal payouts by Bayer.