Merck KGaA (MRK) AI Stock Analysis

• Market Cap: €48.24B
• Dividend Yield: 1.97%
• Average Volume (3M): 340.16K
• Price to Earnings (P/E): 16.8
• Beta (1Y): 0.70
• Revenue Growth: 1.67%
• EPS Growth: 9.02%
• Country: DE
• Employees: 59,020
• Sector: Healthcare
• Sector Strength: 48
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 2.02
• Shares Outstanding: 129,242,250
• 10 Day Avg. Volume: 276,501
• 30 Day Avg. Volume: 340,160
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €142.22
• Price Target Upside: 26.81% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 69 Neutral
• Price Target: €121.00 ▲(7.89% Upside)

Merck KGaA's overall score is driven by its strong financial performance and stable valuation. The technical analysis suggests a neutral market position. The absence of earnings call data and corporate events did not impact the score.

Positive Factors

Electronics Division

Electronics recovery is playing out due to AI, improving the profile of the division.

Growth Expectations

A return to growth in Life Sciences and Process Solutions for the first time in five quarters is expected to give additional confidence to investors on future growth expectations.

Valuation

Analyst re-iterates BUY as MRK is attractively valued compared to its end markets and peers.

Negative Factors

EBITDA Quality

There is a negative perception surrounding Healthcare-driven EBITDA beats due to cost releases, which investors might see as lower quality compared to topline-driven growth.

Life Sciences Challenges

There is a clear lack of visibility on FY25 Life Sciences trends, with Bioprocessing numbers below mid-term expectations.

Sales Expectations

The guidance indicates that the upper end of the sales range is out of reach, aligning with previous messaging but possibly disappointing investors hoping for higher sales figures.

Merck KGaA Business Overview & Revenue Model

Company Description

MERCK Kommanditgesellschaft auf Aktien operates in the healthcare, life science, and electronics sectors worldwide. It discovers, develops, manufactures, and markets pharmaceutical and biological prescription drugs to treat neurology and immunology, oncology, fertility, and cardiology metabolism and endocrinology. The company also supplies products, tools, and services for research laboratories, pharma and biotech production, and industrial and testing laboratories. In addition, it offers material for integrated circuits, liquid crystals, organic light-emitting diodes, photoresists, smart antenna, and liquid crystal glazing solutions, as well as effect pigments for use in automotive coatings, cosmetics, industrial, and plastic applications. It has strategic alliances with Pfizer Inc.; agreement with Novartis AG; and license agreements with Debiopharm International SA and MoonLake Immunotherapeutics AG. The company was founded in 1668 and is headquartered in Darmstadt, Germany. MERCK Kommanditgesellschaft auf Aktien is a subsidiary of E. Merck Kommanditgesellschaft.

How the Company Makes Money

Merck KGaA generates revenue through several key streams. The healthcare segment is a major contributor, with sales from prescription drugs and biopharmaceuticals targeting various therapeutic areas. The life science sector provides laboratory supplies, reagents, and services for research and production processes, catering to academic institutions and industrial customers. The performance materials division specializes in providing high-tech materials for the electronics industry, including liquid crystals and pigments. Strategic partnerships and collaborations with biotech firms and research institutions enhance Merck's innovation capabilities and market reach, contributing significantly to its earnings. Additionally, investment in R&D fosters the development of new products, which can lead to increased sales and market share.

Merck KGaA Financial Statement Overview

Summary

Merck KGaA demonstrates strong financial performance with consistent profitability, stable revenue growth, and efficient operations. The balance sheet is robust with conservative leverage, and cash flow metrics highlight strong liquidity and operational efficiency, although return on equity has room for improvement.

Income Statement

Merck KGaA's income statement shows solid profitability with a TTM gross profit margin of 59.21% and a net profit margin of 13.22%. The company has demonstrated stable revenue growth, with a TTM revenue increase of 0.76% compared to the previous year. The EBIT margin is strong at 17.45%, while the EBITDA margin stands at 28.36%, indicating efficient operations. The consistency in margins and moderate revenue growth highlight robust financial health.

Balance Sheet

The balance sheet of Merck KGaA reflects a sound financial position. The debt-to-equity ratio is 0.29, indicating a conservative leverage stance, while the equity ratio is solid at 60.42%, providing a strong capital base. However, the return on equity (ROE) is relatively modest at 9.45%, suggesting room for improvement in generating returns for shareholders. Overall, the company maintains a stable balance sheet with manageable debt levels.

Cash Flow

Merck KGaA's cash flow statement exhibits healthy cash generation. The free cash flow has grown by 15.76% in the TTM, and the operating cash flow to net income ratio is 1.46, indicating efficient cash conversion from earnings. The free cash flow to net income ratio is 0.72, reflecting a good level of cash available after capital expenditures for reinvestment or distribution to shareholders. The cash flow metrics indicate strong liquidity and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	21.22B	21.16B	20.99B	22.23B	19.69B	17.53B
Gross Profit	12.41B	12.48B	11.67B	13.71B	12.34B	10.70B
EBITDA	5.87B	5.96B	5.68B	6.28B	5.88B	4.78B
Net Income	2.86B	2.78B	2.82B	3.33B	3.06B	1.99B
Balance Sheet
Total Assets	47.35B	51.57B	48.49B	48.53B	45.36B	41.80B
Cash, Cash Equivalents and Short-Term Investments	1.57B	2.71B	2.41B	1.64B	1.62B	1.14B
Total Debt	9.40B	10.27B	9.94B	10.40B	10.77B	12.04B
Total Liabilities	19.02B	21.58B	21.74B	22.52B	23.95B	24.78B
Stockholders Equity	28.26B	29.91B	26.68B	25.93B	21.34B	16.95B
Cash Flow
Free Cash Flow	1.78B	2.40B	1.76B	2.45B	3.19B	1.91B
Operating Cash Flow	3.81B	4.59B	3.78B	4.26B	4.62B	3.48B
Investing Cash Flow	-2.89B	-3.05B	-1.89B	-2.74B	-1.58B	-1.34B
Financing Cash Flow	-2.38B	-985.00M	-1.73B	-1.55B	-2.50B	-1.52B

Merck KGaA Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 112.15
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:MRK, the sentiment is Positive. The current price of 112.15 is above the 20-day moving average (MA) of 109.91, above the 50-day MA of 110.71, and below the 200-day MA of 125.58, indicating a neutral trend. The MACD of 0.11 indicates Negative momentum. The RSI at 55.02 is Neutral, neither overbought nor oversold. The STOCH value of 74.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:MRK.

Merck KGaA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRK	69 Neutral	€48.24B	16.85	10.08%	1.97%	1.67%	9.02%
Sector *	51 Neutral	$7.82B	-0.16	-39.78%	2.19%	21.38%	-1.56%
0P6S	―	€27.64B	―	-10.35%	―	―	―
0N6Z	―	€1.38B	61.76	-4.72%	―	―	―
0OO9	―	€26.52B	23.78	7.30%	―	―	―
0NIQ	―	€12.42B	108.24	3.88%	0.44%	―	―
SEMHF	―	$61.96B	26.43	11.75%	1.69%	―	―