Merck & Company (MRK) AI Stock Analysis

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Merck & Company

(NYSE:MRK)

73Outperform

Merck & Company's overall stock score reflects its strong financial performance and attractive valuation. The company's robust pipeline and product launches support long-term growth, though short-term challenges such as declining Gardasil sales and tariff impacts present risks. Technical analysis suggests caution, with mixed signals leaning towards bearish trends. This balanced view positions Merck as a stable investment with potential for growth, tempered by near-term uncertainties.

Positive Factors

Financial Performance

Merck beats on top (+1% vs. consensus) and bottom line (+4%) with relatively muted impacts to tariffs noted (~$200M).

Product Performance

Januvia and Janumet surprised with higher revenues (+49% and +16% respectively) likely due to the lowering of list prices to align closer with net pricing.

Negative Factors

Product Challenges

More Gardasil headwinds complicate Merck's potential to regain its footing.

Regulatory Concerns

Significant uncertainty remains due to the Keytruda 2028 loss-of-exclusivity and other regulatory overhangs.

Merck & Company (MRK) vs. S&P 500 (SPY)

Market Cap

$209.34B

Dividend Yield3.82%

Average Volume (3M)18.13M

Price to Earnings (P/E)12.1

Beta (1Y)0.38

Revenue Growth4.26%

EPS GrowthN/A

CountryUS

Employees73,000

SectorHealthcare

Sector Strength69

IndustryDrug Manufacturers - General

Share Statistics

EPS (TTM)6.87

Shares Outstanding2,516,394,000

10 Day Avg. Volume17,276,130

30 Day Avg. Volume18,129,788

Financial Highlights & Ratios

PEG Ratio0.00256

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.32

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit5.34

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$104.47

Price Target Upside23.33% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering19

Merck & Company Business Overview & Revenue Model

Company DescriptionMerck & Co., Inc. operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health. The Pharmaceutical segment offers human health pharmaceutical products in the areas of oncology, hospital acute care, immunology, neuroscience, virology, cardiovascular, and diabetes, as well as vaccine products, such as preventive pediatric, adolescent, and adult vaccines. The Animal Health segment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, and health management solutions and services, as well as digitally connected identification, traceability, and monitoring products. It serves drug wholesalers and retailers, hospitals, and government agencies; managed health care providers, such as health maintenance organizations, pharmacy benefit managers, and other institutions; and physicians and physician distributors, veterinarians, and animal producers. The company has collaborations with AstraZeneca PLC; Bayer AG; Eisai Co., Ltd.; Ridgeback Biotherapeutics; and Gilead Sciences, Inc. to jointly develop and commercialize long-acting treatments in HIV. Merck & Co., Inc. was founded in 1891 and is headquartered in Kenilworth, New Jersey.

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

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
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

Technical Analysis Sentiment

Neutral

Last Price84.71

Price Trends

50DMA

87.02

Negative

100DMA

91.66

Negative

200DMA

100.62

Negative

Market Momentum

MACD

-1.66

Negative

RSI

54.46

Neutral

STOCH

92.10

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRK, the sentiment is Neutral. The current price of 84.71 is above the 20-day moving average (MA) of 80.92, below the 50-day MA of 87.02, and below the 200-day MA of 100.62, indicating a neutral trend. The MACD of -1.66 indicates Negative momentum. The RSI at 54.46 is Neutral, neither overbought nor oversold. The STOCH value of 92.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MRK.

Merck & Company Risk Analysis

Merck & Company disclosed 31 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 (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVS	81 Outperform	$215.95B	19.04	26.33%	2.92%	1.08%	-17.73%
AZN	77 Outperform	$219.09B	30.81	19.81%	2.18%	18.03%	18.11%
MRK	73 Outperform	$209.34B	12.11	40.81%	3.82%	4.26%	―
SNY	71 Outperform	$125.03B	21.43	7.34%	2.82%	-4.57%	2.96%
PFE	66 Neutral	$130.73B	16.36	9.05%	7.37%	8.77%	272.80%
AMGN	60 Neutral	$152.20B	37.45	67.55%	3.25%	18.64%	-39.39%
Sector *	51 Neutral	$5.35B	3.41	-40.83%	2.89%	18.11%	2.60%

* Healthcare Sector Average

Performance Comparison

MRK

Merck & Company

84.71

-40.38

-32.28%

AMGN

Amgen

288.56

19.40

7.21%

AZN

AstraZeneca

71.71

-3.19

-4.26%

NVS

Novartis

113.45

18.82

19.89%

PFE

Pfizer

23.79

-1.79

-7.00%

SNY

Sanofi

53.72

5.17

10.65%

Merck & Company Earnings Call Summary

Earnings Call Date:Apr 24, 2025

(Q1-2025)

% Change Since: 7.58%|

Next Earnings Date:Jul 29, 2025

Earnings Call Sentiment Neutral

The call presented a balanced view with strong emphasis on future growth potential through a robust pipeline and key product launches, while addressing challenges such as declining Gardasil sales in China and the impact of tariffs and foreign exchange. While there are significant growth drivers, the lowlights indicate notable challenges that could affect near-term performance.

Q1-2025 Updates

Positive Updates

Strong Pipeline and Future Growth Potential

Merck highlighted a robust pipeline with over 20 new products expected to launch in the next few years, most of which have blockbuster potential, contributing to a potential commercial opportunity of over $50 billion by the mid-2030s.

Key Product Launches and Growth Drivers

Significant contributions from new products WinRevair and Capfaxiv, with WinRevair achieving global sales of $280 million and robust uptake in the treatment of pulmonary arterial hypertension.

Oncology Segment Performance

Keytruda sales grew by 6% to $7.2 billion with strong demand in both early-stage and metastatic cancers. Welireg sales increased 63% to $137 million, leading in the treatment of advanced renal cell carcinoma.

Animal Health Business Growth

The animal health segment delivered a strong performance with sales increasing by 10% due to higher demand across all species and recent acquisitions.

Negative Updates

Decline in Gardasil Sales in China

Gardasil sales decreased by 40% due to elevated channel inventories and soft demand in China, impacting global growth negatively by seven percentage points.

Impact of Tariffs on Financial Outlook

Approximately $200 million in costs from tariffs primarily between the US and China, with potential further impacts from additional tariffs on pharmaceuticals.

Challenges in Foreign Exchange Impact

Foreign exchange negatively impacted revenues by approximately 1%, affecting overall financial performance.

Company Guidance

During the Merck & Co., Inc. Q1 2025 earnings call, the company reported revenues of $15.5 billion, reflecting a 1% increase excluding foreign exchange impacts. Oncology sales, driven by Keytruda, grew by 6% to $7.2 billion, while new products like WinRevair and Capfaxiv also contributed positively. Gardasil sales decreased by 40% due to reduced demand in China, but global growth excluding China was 8%. The company maintained its 2025 revenue guidance of $64.1 to $65.6 billion, with expected EPS of $8.82 to $8.97. Merck highlighted a strong pipeline with over 20 potential blockbuster products and investments in US manufacturing totaling more than $21 billion since 2018. The call also addressed tariff impacts, with $200 million in costs anticipated, and emphasized ongoing efforts to optimize the supply chain.

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.