Merck KGaA (MRK) AI Stock Analysis

• Market Cap: €47.54B
• Dividend Yield: 2.01%
• Average Volume (3M): 308.40K
• Price to Earnings (P/E): 16.9
• Beta (1Y): 0.67
• Revenue Growth: 2.38%
• EPS Growth: 3.49%
• Country: DE
• Employees: 59,020
• Sector: Healthcare
• Sector Strength: 39
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 2.12
• Shares Outstanding: 129,242,250
• 10 Day Avg. Volume: 292,016
• 30 Day Avg. Volume: 308,400
• PEG Ratio: 12.23
• Price to Book (P/B): 1.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 23.53
• 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: €148.75
• Price Target Upside: 33.29% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 74 Outperform
• Price Target: €125.00 ▲(12.01%Upside)

Merck KGaA's overall stock score is driven by its strong financial performance and fair valuation. The company's robust profitability, efficient operations, and solid balance sheet underpin its financial health. Technical analysis suggests a slightly bearish trend, but the company's valuation remains reasonable. The absence of earnings call and corporate events data means these factors did not influence 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 diverse streams across its three main sectors. In the Healthcare sector, the company earns from the sale of prescription medicines, biopharmaceuticals, and consumer health products. Its Life Science division provides tools, laboratory supplies, and services to research, biopharmaceutical manufacturing, and diagnostics, generating income through product sales and service contracts. The Electronics sector contributes to revenue by supplying high-performance materials and solutions used in the semiconductor and display industries. Strategic partnerships and collaborations, particularly in drug development and technology innovation, also play a crucial role in enhancing its revenue potential.

Merck KGaA Financial Statement Overview

Summary

Merck KGaA shows stable financial health with strong revenue growth and operational efficiency. The balance sheet is robust with a healthy equity base and manageable debt levels. Cash flow generation is solid, but there is some margin compression and slight decreases in profitability ratios.

Income Statement

Merck KGaA has demonstrated stable revenue growth with a 0.78% increase from 2023 to 2024. The gross profit margin is strong at 59.00%, indicating efficient production processes. However, the net profit margin decreased slightly to 13.12%, suggesting increased operational costs. The EBIT margin stands at 17.23% and the EBITDA margin at 28.18%, showing solid operational efficiency despite some margin compression.

Balance Sheet

The company's debt-to-equity ratio is 0.34, reflecting a stable capital structure with manageable debt levels. The return on equity decreased slightly to 9.29%, indicating moderate efficiency in using equity to generate profits. The equity ratio is robust at 58.00%, reflecting a solid equity base compared to total assets.

Cash Flow

Operating cash flow increased significantly by 21.20%, indicating improved cash generation from core operations. The free cash flow to net income ratio is 0.87, showing a healthy conversion of net income into free cash flow. However, the operating cash flow to net income ratio is 1.65, which suggests strong cash generation efficiency relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	21.32B	21.16B	20.99B	22.23B	19.69B	17.53B
Gross Profit	12.62B	12.48B	11.67B	13.71B	12.34B	10.70B
EBITDA	6.04B	5.96B	5.68B	6.28B	5.88B	4.78B
Net Income	2.82B	2.78B	2.82B	3.33B	3.06B	1.99B
Balance Sheet
Total Assets	49.37B	51.57B	48.49B	48.53B	45.36B	41.80B
Cash, Cash Equivalents and Short-Term Investments	1.62B	2.71B	2.41B	1.64B	1.62B	1.14B
Total Debt	8.70B	10.27B	9.94B	10.40B	10.77B	12.04B
Total Liabilities	19.48B	21.58B	21.74B	22.52B	23.95B	24.78B
Stockholders Equity	29.82B	29.91B	26.68B	25.93B	21.34B	16.95B
Cash Flow
Free Cash Flow	2.04B	2.40B	1.76B	2.45B	3.19B	1.91B
Operating Cash Flow	4.11B	4.59B	3.78B	4.26B	4.62B	3.48B
Investing Cash Flow	-2.78B	-3.05B	-1.89B	-2.74B	-1.58B	-1.34B
Financing Cash Flow	-2.49B	-985.00M	-1.73B	-1.55B	-2.50B	-1.52B

Merck KGaA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 111.60
• 50DMA: Negative
• 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 Negative. The current price of 111.6 is below the 20-day moving average (MA) of 111.84, below the 50-day MA of 115.83, and below the 200-day MA of 132.66, indicating a bearish trend. The MACD of -1.29 indicates Negative momentum. The RSI at 46.89 is Neutral, neither overbought nor oversold. The STOCH value of 39.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DE:MRK.

Merck KGaA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SHL	77 Outperform	$52.00B	24.98	11.14%	2.04%	5.83%	13.44%
MRK	74 Outperform	€47.54B	16.87	9.74%	2.01%	2.38%	3.49%
SRT	69 Neutral	€13.55B	126.80	3.55%	0.42%	3.99%	-36.36%
BAYN	62 Neutral	€25.69B	―	-9.56%	0.36%	-0.92%	-4.30%
FRE	61 Neutral	€23.66B	56.63	6.28%	2.02%	-18.90%	―
BIO	53 Neutral	€1.42B	64.15	-4.72%	0.10%	-18.82%	-113.85%
Sector *	52 Neutral	$7.45B	0.27	-61.87%	2.30%	16.62%	1.04%