Bayer, close to the final round(up)?

After years of accumulating problems (generic drugs, lawsuits, managerial inertia), according to Goldman Sachs Bayer is becoming a textbook case of "less bad = better." The stock is up more than 3% on the Frankfurt Stock Exchange.

The US bank has upgraded the stock to a buy, convinced that the alignment of the planets justifies returning to the stock. Thanks to a rebound of nearly 40% this year, the stock has almost erased its losses over the past 12 months - although not those inherited from the Monsanto takeover, far from it.

For those who love stories of dubious comebacks, the German conglomerate now offers an "asymmetrical risk/return profile." In other words, you lose little if everything goes wrong, but you gain a lot if the miracle happens. The alignment of the planets that GS is talking about is basically forced budgetary discipline, a pharmaceutical pipeline on steroids, a possible legal wild card in Washington, and a management team that no one believes can do worse than it has done in recent years.

The dream scenario is based on a clinical trial (asundexian), which could be a game-changer for the Pharma division, and divine intervention by the US Supreme Court in the never-ending Roundup saga. In pharma, Bayer is trying to make people forget the post-Xarelto slump with Nubeqa, while the agri division is going on a strict diet under a new "operating model" – meaning less fat, but no muscle yet. For GS, the cycle of unpleasant surprises is a thing of the past. But execution still needs to follow.

With a tiny P/E multiple and a target price of €33, the story looks good on paper, even if the move to buy seems less like a declaration of love than a calculated speculation on relief.