Bayer Plunges as Monsanto Fined $289M in Roundup Lawsuit

Shares of Bayer AG BAYRY went down almost 11% after its newly acquired subsidiary Monsanto was ordered by the California state jury to pay $289 million in damages over alleged links between its Roundup weedkiller and cancer.

The lawsuit began when a school groundskeeper, who was diagnosed with terminal cancer, stated that the cause of his cancer was Monsanto's herbicide Roundup. This was just the first verdict amid thousands of cases that claimed that Roundup causes cancer. Jurors in California superior court agreed that the product contributed to the groundskeeper’s cancer and the company should have provided a label warning of the potential health hazard. 

Monsanto stated that Glyphosate, the main ingredient in Roundup was completely safe to use and did not cause cancer. The company added that decades of scientific studies have shown the chemical to be safe for human use.

However, there have been debates by the environmentalists, regulators, researchers and lawyers about whether Roundup causes cancer.

Monsanto stated that it would appeal against the jury's verdict in California. As per the reports, the trial was an important test of the evidence against Monsanto and this could influence decisions in other lawsuits. 

The case is a blow for Bayer as the company completed the buy out of Monsanto in June for about $66 million. Shares of the company have declined 24.1% compared with the industry’s growth of 2.6%.

 

Bayer Aktiengesellschaft Price

 

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Zacks Rank & Stocks to Consider

Bayer carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the biotech sector are Gilead Sciences Inc. GILD, Vertex Pharmaceuticals VRTX and Seattle Genetics SGEN. While Gilead carries a Zacks Rank #1 (Strong Buy), Vertex and Seattle carry Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates have increased from $6.12 to $6.57 for 2018 and from $6.36 to $6.48 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 6.43%. The stock has rallied 7.8% so far this year.

Vertex’s earnings per share estimates moved up from $3.15 to $3.74 for 2018 and from $4.33 to $4.59 for 2019 in the last 30 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 27.5%. Share price of the company has increased 16.9% in a year.

Seattle Genetics’ 2018 loss per share estimates narrowed from $1.81 to 83 cents for 2018 and from 81 cents to 39 cents for 2019 in the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 12.93%. The company’s shares have rallied 38% year to date.

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