The stock price of Bayer AG was flying high up until the spring of 2015 when it exceeded €144 a share. In 2016, the company announced its $66 billion acquisition of Monsanto, and it all went downhill from there. Not only was the purchase quite expensive, but thousands of lawsuits have been filed against Monsanto, alleging that its Roundup weed killer causes cancer.
As of this writing, BAYN trades below €60 a share and the company’s total market cap is less than what it paid for Monsanto. It’s yet to be seen whether new CEO Bill Anderson will be able to right the ship and bring the glory days back at Bayer. The Elliott Wave chart below suggests it might take a while.
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The weekly price chart of Bayer depicts the stock’s entire bear market from the top at €144.12 to €39.91 so far. It looks like a five-wave impulse, labeled (1)-(2)-(3)-(4)-(5), whose fifth and final wave is still missing. Wave (1) is a leading diagonal, followed by a simple a-b-c zigzag up to the 61.8% Fibonacci level in wave (2). Wave (3) was, of course, an impulse, where two lower degrees of the trend are visible.
The market has also observed the guideline of alternation between the second and the fourth wave. Wave (2) was a sharp recovery, while wave (4) seems to have just ended as an a-b-c-d-e sideways triangle correction. Triangles precede the final wave of the larger sequence, which means we can expect one last drop in wave (5). The fifth wave is supposed to reach a new low, putting targets near the €30 mark on the table. From the current level, that would be a ~50% decline.
The Elliott Wave theory states that a three-wave correction follows every impulse. So, once the impulsive structure is eventually complete, it would be time for a notable recovery. The resistance near €90 a share looks like a natural bullish target in the long term. For now though, we’d stick to the 18 positions in The EWM Interactive Stock Portfolio and watch Bayer from a safe distance.
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