Merck KGaA (MRK) AI Stock Analysis

• Market Cap: €54.41B
• Dividend Yield: 1.8%
• Average Volume (3M): 364.71K
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.71
• Revenue Growth: 0.78%
• EPS Growth: -1.70%
• Country: DE
• Employees: 59,020
• Sector: Healthcare
• Sector Strength: 48
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 2.07
• Shares Outstanding: 129,242,250
• 10 Day Avg. Volume: 297,792
• 30 Day Avg. Volume: 364,710
• PEG Ratio: 6.66
• Price to Book (P/B): 1.79
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 25.29
• 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: €157.94
• Price Target Upside: 25.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

Merck KGaA demonstrates stable financial performance with solid revenue growth and operational efficiency, though there are areas of margin compression. The technical analysis indicates mixed momentum, with some positive short-term signals. Valuation metrics suggest the stock is reasonably valued, offering moderate income potential through dividends. Overall, the company maintains a strong financial position with potential for steady growth.

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, with significant improvements in operating cash flows. However, there are areas of 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
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
21.16B	20.99B	22.23B	19.69B	17.53B
	Gross Profit
12.48B	11.67B	13.71B	12.34B	10.70B
	EBIT
3.65B	3.61B	4.47B	4.18B	2.98B
	EBITDA
5.96B	5.68B	6.28B	5.88B	4.78B
	Net Income Common Stockholders
2.78B	2.82B	3.33B	3.06B	1.99B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.71B	2.41B	1.64B	1.62B	1.14B
	Total Assets
51.57B	48.49B	48.53B	45.36B	41.80B
	Total Debt
10.27B	9.94B	10.40B	10.77B	12.04B
	Net Debt
8.12B	7.96B	9.00B	9.26B	10.93B
	Total Liabilities
21.58B	21.74B	22.52B	23.95B	24.78B
	Stockholders Equity
29.91B	26.68B	25.93B	21.34B	16.95B
Cash Flow		Free Cash Flow
2.40B	1.76B	2.45B	3.19B	1.91B
	Operating Cash Flow
4.59B	3.78B	4.26B	4.62B	3.48B
	Investing Cash Flow
-3.05B	-1.89B	-2.74B	-1.58B	-1.34B
	Financing Cash Flow
-985.00M	-1.73B	-1.55B	-2.50B	-1.52B

Merck KGaA Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 126.25
• 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 126.25 is above the 20-day moving average (MA) of 119.45, above the 50-day MA of 124.47, and below the 200-day MA of 143.09, indicating a neutral trend. The MACD of 0.36 indicates Negative momentum. The RSI at 57.00 is Neutral, neither overbought nor oversold. The STOCH value of 58.47 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	€54.41B	19.59	9.81%	1.80%	0.78%	-1.70%
Sector *	52 Neutral	$5.21B	3.49	-43.30%	2.83%	14.70%	-0.24%