Merck KGaA (MRK) AI Stock Analysis

• Market Cap: €51.89B
• Dividend Yield: 1.84%
• Average Volume (3M): 321.00K
• Price to Earnings (P/E): 17.6
• Beta (1Y): 0.84
• Revenue Growth: 1.47%
• EPS Growth: 9.64%
• Country: DE
• Employees: 59,020
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 2.32
• Shares Outstanding: 129,242,250
• 10 Day Avg. Volume: 344,164
• 30 Day Avg. Volume: 321,004
• PEG Ratio: -12.94
• Price to Book (P/B): 2.03
• Price to Sales (P/S): 2.88
• P/FCF Ratio: 25.32
• 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: €140.57
• Price Target Upside: 18.28% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: €131.00 ▲(10.22% Upside)

Merck KGaA's strong financial performance and positive technical indicators are the primary drivers of its stock score. The company's robust revenue growth and stable balance sheet position it well within the industry. The technical analysis supports a bullish outlook, though caution is advised due to the stochastic indicator nearing overbought levels. The valuation is fair, with a reasonable P/E ratio and a modest dividend yield.

Positive Factors

Revenue Growth

Merck KGaA's robust revenue growth indicates a strong market position and effective product strategy, supporting long-term business expansion.

Cash Flow Generation

Strong cash flow generation enhances financial flexibility, enabling strategic investments and sustaining operations over the long term.

Patent Portfolio Strategy

The sale of OLED patents aligns with Merck's focus on core materials, optimizing its portfolio and supporting strategic business focus.

Negative Factors

Rising Debt Levels

Increasing debt levels may strain financial resources, potentially impacting future investment capacity and financial stability.

Margin Pressure

Declining margins may indicate rising costs or pricing pressures, which could affect profitability if not addressed.

Operating Cash Flow Decline

A decline in operating cash flow could signal challenges in cash generation, potentially affecting liquidity and operational funding.

Merck KGaA Business Overview & Revenue Model

Company Description

Merck KGaA, Darmstadt, Germany, is a global science and technology company that operates in the healthcare, life science, and performance materials sectors. The company is dedicated to developing innovative solutions to improve the health and quality of life of people worldwide. Its core products include pharmaceuticals, biopharmaceuticals, and specialty chemicals, with strong emphasis on areas such as oncology, neurology, and fertility treatments. Additionally, Merck KGaA offers laboratory materials and services, as well as high-tech materials for various industries, including electronics and cosmetics.

How the Company Makes Money

Merck KGaA generates revenue through multiple streams including the sale of pharmaceuticals and biopharmaceuticals, which represent a significant portion of its income. The healthcare segment focuses on innovative medicines and biosimilars, while the life science sector provides laboratory products and services to research and academic institutions. Additionally, the performance materials division contributes revenue through specialty chemicals and materials for the electronics and cosmetics industries. The company also benefits from strategic partnerships and collaborations, which enhance its product offerings and market reach. Furthermore, ongoing investments in research and development enable Merck KGaA to innovate and expand its product pipeline, thereby driving future revenue growth.

Merck KGaA Financial Statement Overview

Summary

Merck KGaA shows strong profitability with healthy EBIT and EBITDA margins and a stable balance sheet. However, negative revenue growth and declining free cash flow are concerns.

Income Statement

Merck KGaA's income statement shows strong profitability with a consistent gross profit margin around 59% and a net profit margin over 13% in TTM. However, the revenue growth rate has been negative recently, indicating a potential challenge in maintaining top-line growth. Despite this, the EBIT and EBITDA margins remain healthy, reflecting operational efficiency.

Balance Sheet

The balance sheet is stable with a manageable debt-to-equity ratio of 0.29 in TTM, showing a decrease from previous years, which indicates improved leverage management. Return on equity is solid at around 9.67%, though slightly lower than previous years, suggesting a need for enhanced profitability. The equity ratio indicates a strong capital structure.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth, which is a concern for future liquidity. The operating cash flow to net income ratio is moderate, indicating reasonable cash generation from operations. However, the free cash flow to net income ratio has decreased, suggesting potential challenges in cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	21.27B	21.16B	20.99B	22.23B	19.69B	17.53B
Gross Profit	12.48B	12.48B	11.67B	13.71B	12.34B	10.70B
EBITDA	6.00B	5.96B	5.68B	6.28B	5.88B	4.78B
Net Income	2.96B	2.78B	2.82B	3.33B	3.06B	1.99B
Balance Sheet
Total Assets	50.93B	51.57B	48.49B	48.53B	45.36B	41.80B
Cash, Cash Equivalents and Short-Term Investments	2.92B	2.71B	2.41B	1.64B	1.62B	1.14B
Total Debt	12.10B	10.27B	9.94B	10.40B	10.77B	12.04B
Total Liabilities	21.93B	21.58B	21.74B	22.52B	23.95B	24.78B
Stockholders Equity	28.94B	29.91B	26.68B	25.93B	21.34B	16.95B
Cash Flow
Free Cash Flow	1.93B	2.40B	1.76B	2.45B	3.19B	1.91B
Operating Cash Flow	3.87B	4.59B	3.78B	4.26B	4.62B	3.48B
Investing Cash Flow	-4.31B	-3.05B	-1.89B	-2.74B	-1.58B	-1.34B
Financing Cash Flow	-408.00M	-985.00M	-1.73B	-1.55B	-2.50B	-1.52B

Merck KGaA Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 118.85
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 118.85 is above the 20-day moving average (MA) of 117.06, above the 50-day MA of 115.22, and above the 200-day MA of 115.08, indicating a bullish trend. The MACD of 1.41 indicates Negative momentum. The RSI at 56.13 is Neutral, neither overbought nor oversold. The STOCH value of 63.92 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	76 Outperform	€51.89B	17.55	10.32%	1.84%	1.47%	9.64%
SHL	67 Neutral	€49.81B	23.32	11.45%	2.15%	4.53%	10.12%
SRT	64 Neutral	€14.54B	95.22	5.01%	0.40%	5.82%	59.90%
FRE	62 Neutral	€26.64B	23.54	7.50%	2.09%	0.63%	―
BAYN	54 Neutral	€34.49B	-175.19	-0.66%	0.31%	-1.87%	77.51%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%
BIO	51 Neutral	€1.33B	-57.83	―	―	-18.82%	-113.85%