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Merck & Company (MRK)
NYSE:MRK
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Merck & Company
(NYSE:MRK)71Outperform
Positive Factors
Drug Approval
The US FDA granted Breakthrough Therapy Designation to sac-TMT for the treatment of patients with advanced or metastatic nonsquamous non-small cell lung cancer.
Product Performance
The ZENITH and HYPERION trial updates support the broad benefit of Winrevair in both late and early PAH patients, potentially increasing its uptake.
Negative Factors
Market Challenges
Gardasil's Q2 weakness in China likely will not be a temporary effect due to longer lasting political and economic pressures, including China's anti-corruption campaign.
Patent Expiry
Merck may face risk of revenue drops if pipeline drugs fail to deliver before the patent expiry of Keytruda in 2028.
Merck & Company (MRK) vs. S&P 500 (SPY)
Market Cap
$235.30B
Dividend Yield3.35%
Average Volume (3M)17.33M
Price to Earnings (P/E)13.8
Beta (1Y)0.21
Revenue Growth6.85%
EPS Growth4577.79%
CountryUS
Employees75,000
SectorHealthcare
Sector Strength74
IndustryPharmaceuticals
Share Statistics
EPS (TTM)6.73
Shares Outstanding2,526,036,100
10 Day Avg. Volume15,422,932
30 Day Avg. Volume17,325,940
Financial Highlights & Ratios
PEG Ratio0.00302
Price to Book (P/B)N/A
Price to Sales (P/S)3.67
Price to Cash Flow (P/CF)17.10
P/FCF Ratio17.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$111.88Price Target Upside20.87% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Merck & Company Business Overview & Revenue Model
Company DescriptionMerck & Co., Inc. develops pharmaceutical and vaccine products. It also offers healthcare solutions and vaccines addressing animal health. The company was founded in 1891 and is headquartered in Kenilworth, NJ.
How the Company Makes MoneyMerck & Company generates revenue primarily through the sale of pharmaceutical products, vaccines, and animal health products. The company's pharmaceutical segment is its largest revenue stream, driven by key products such as Keytruda (an immunotherapy for cancer treatment), Gardasil (a vaccine for HPV), and Januvia/Janumet (medications for type 2 diabetes). Merck also earns substantial revenue from its Animal Health division, which provides veterinary pharmaceuticals and vaccines. The company engages in strategic partnerships and collaborations with other pharmaceutical companies, research institutions, and healthcare providers to enhance its product pipeline and expand market reach. Additionally, Merck invests significantly in research and development to innovate new treatments, contributing to its long-term revenue growth and competitive position in the healthcare industry.
Merck & Company Financial Statement Overview
Summary
Merck & Company shows robust revenue growth and improved profit margins, with a strong balance sheet reflecting reduced debt levels. However, cash flow volatility and incomplete data for 2024 present challenges in fully assessing liquidity and capital allocation efficiency.Income Statement
Merck & Company has shown consistent revenue growth over the past years, with a notable increase from $41.5 billion in 2020 to $64.2 billion in 2024. The gross profit margin is strong at 80.82%, and the net profit margin significantly improved to 26.68% in 2024, indicating effective cost management and profitability enhancement. However, there was a dip in EBIT and EBITDA margins in 2023, which recovered in 2024, reflecting some operational challenges.85
Very Positive
Balance Sheet
The balance sheet indicates a solid equity position with stockholders' equity at $44.56 billion in 2024. The debt-to-equity ratio was effectively managed, decreasing from 0.84 in 2020 to 0 by 2024, which significantly reduces financial risk. However, the absence of total assets data for 2024 limits the complete assessment of the company's asset utilization and leverage.75
Positive
Cash Flow
Merck's free cash flow has shown volatility, with a decrease from $9.67 billion in 2021 to $0 in 2024 due to missing data. Operating cash flow was strong in 2023 at $13.01 billion, though data for subsequent periods are unavailable. The fluctuations in cash flow highlight potential concerns in cash management and capital expenditure strategies.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 64.17B | 60.12B | 59.28B | 48.70B | 41.52B | Gross Profit |
| 51.88B | 43.99B | 41.87B | 35.08B | 27.90B | EBIT |
| 22.69B | 2.95B | 19.40B | 13.70B | 6.08B | EBITDA |
| 26.94B | 6.91B | 21.32B | 17.90B | 10.18B | Net Income Common Stockholders |
| 17.12B | 365.00M | 14.52B | 13.05B | 7.07B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 13.69B | 7.09B | 13.19B | 8.10B | 8.06B | Total Assets |
| 77.28B | 106.67B | 109.16B | 105.69B | 91.59B | Total Debt |
| 37.11B | 36.27B | 30.69B | 33.10B | 31.79B | Net Debt |
| 23.87B | 29.43B | 18.00B | 25.01B | 23.73B | Total Liabilities |
| 30.97B | 69.04B | 63.10B | 67.44B | 66.18B | Stockholders Equity |
| 46.31B | 37.58B | 45.99B | 38.18B | 25.32B |
| Cash Flow | Free Cash Flow | |||
| 18.10B | 9.14B | 14.71B | 9.66B | 5.57B | Operating Cash Flow |
| 21.47B | 13.01B | 19.09B | 14.11B | 10.25B | Investing Cash Flow |
| -7.73B | -14.08B | -4.96B | -16.55B | -9.44B | Financing Cash Flow |
| -7.03B | -4.81B | -9.12B | 2.59B | -2.83B |
Merck & Company Technical Analysis
Negative
92.56
Price Trends
94.67
Negative
98.45
Negative
109.19
Negative
Market Momentum
-0.73
Negative
53.45
Neutral
87.71
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRK, the sentiment is Negative. The current price of 92.56 is above the 20-day moving average (MA) of 88.42, below the 50-day MA of 94.67, and below the 200-day MA of 109.19, indicating a neutral trend. The MACD of -0.73 indicates Negative momentum. The RSI at 53.45 is Neutral, neither overbought nor oversold. The STOCH value of 87.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRK.
Merck & Company Risk Analysis
Merck & Company disclosed 29 risk factors in its most recent earnings report. Merck & Company reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Merck & Company Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $398.27B | 28.57 | 19.68% | 2.96% | -4.51% | 3.69% | |
74 Outperform | $863.84B | 77.78 | 73.95% | 0.58% | 32.00% | 102.18% | |
71 Outperform | $235.30B | 13.83 | 36.96% | 3.35% | 6.85% | 4577.79% | |
71 Outperform | $366.77B | 86.92 | 128.66% | 2.97% | 3.71% | -12.14% | |
69 Neutral | $145.93B | 18.28 | 8.68% | 6.44% | 8.77% | 272.80% | |
60 Neutral | $120.62B | ― | -54.78% | 4.04% | 7.32% | -214.24% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
MRK
Merck & Company
92.56
-27.01
-22.59%
BMY
Bristol-Myers Squibb
59.44
10.09
20.45%
LLY
Eli Lilly & Co
911.06
138.49
17.93%
JNJ
Johnson & Johnson
165.42
10.42
6.72%
PFE
Pfizer
25.75
1.21
4.93%
ABBV
AbbVie
207.76
34.90
20.19%
Merck & Company Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -7.25% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with strong performance in key areas like oncology and new product launches, but challenges persist with GARDASIL in China and impacts from Medicare Part D redesign. Although the company remains confident in its long-term growth potential, short-term headwinds are acknowledged.Highlights
Strong Overall Revenue Growth
Total company revenues were $15.6 billion in Q4 2024, an increase of 7% (9% excluding foreign exchange impacts). The Human Health business sustained its momentum with sales increasing 8%, driven primarily by oncology, and the Animal Health business delivered a 13% sales growth.
KEYTRUDA Performance
KEYTRUDA sales grew 21% to $7.8 billion, driven by robust global demand, increased uptake in earlier-stage cancers, and combination therapies in various tumor types.
WINREVAIR Growth and Clinical Success
WINREVAIR contributed $200 million in sales with continued strong prescription growth. The ZENITH trial for WINREVAIR showed statistically significant reduction in morbidity or mortality in pulmonary arterial hypertension, leading to early trial termination due to efficacy.
Innovative Pipeline and Future Growth Drivers
Merck has 20 potential new growth drivers with blockbuster opportunity, including WINREVAIR, CAPVAXIVE, and various late-phase clinical programs, representing over $50 billion of potential revenue opportunity.
Animal Health Business Growth
The Animal Health business achieved 13% sales growth, driven by higher demand for poultry and sales from the recently acquired aqua portfolio from Elanco.
Lowlights
GARDASIL Challenges in China
GARDASIL sales decreased by 18% due to lower demand in China, leading to elevated inventory levels. Merck decided to temporarily pause shipments to China to allow the inventory to reduce.
Medicare Part D Redesign Impact
The Medicare Part D redesign is expected to negatively impact sales by approximately $400 million, primarily affecting products like WINREVAIR and the portfolio of small molecule oncology products.
VAXNEUVANCE Sales Decline
VAXNEUVANCE sales decreased 9%, as growth from international market launches was more than offset by competitive pressures in the U.S.
Uncertain GARDASIL Long-Term Target
Merck withdrew the $11 billion long-term target for GARDASIL sales due to uncertainties in the timing of economic recovery in China.
Company Guidance
During the Merck Q4 2024 earnings call, the company reported robust financial performance with total revenues reaching $15.6 billion, representing a 7% increase, or 9% when excluding foreign exchange impacts. Key growth drivers included the oncology sector, with KEYTRUDA sales surging by 21% to $7.8 billion, and the Animal Health division reporting a 13% increase in sales. However, GARDASIL experienced an 18% decline in sales due to reduced demand in China, prompting Merck to temporarily pause shipments to the region to manage elevated inventory levels. Despite these challenges, the company maintains a positive outlook, forecasting revenue growth of 2% to 4% for 2025, excluding the anticipated impact of foreign exchange and GARDASIL sales in China. Merck also highlighted its strong gross margin of 80.8% and projected earnings per share (EPS) between $8.88 and $9.03 for 2025.Merck & Company Corporate Events
Executive/Board Changes
Merck & Co. Expands Board with New Director
Positive
Nov 22, 2024
Merck & Co. announced that Surendralal L. Karsanbhai, CEO of Emerson Electric Co., will join its Board of Directors effective January 1, 2025, bringing his extensive business expertise. The board, which will consist of 13 members with his addition, anticipates valuable contributions from his global perspective. This move aligns with Merck’s ongoing commitment to leading-edge science and innovation in the pharmaceutical industry.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.