Merck & Company (MRK) AI Stock Analysis

• Market Cap: $195.46B
• Dividend Yield: 4.1%
• Average Volume (3M): 15.97M
• Price to Earnings (P/E): 11.3
• Beta (1Y): 0.39
• Revenue Growth: 4.40%
• EPS Growth: 654.93%
• Country: US
• Employees: 73,000
• Sector: Healthcare
• Sector Strength: 42
• Industry: Drug Manufacturers - General
• EPS (TTM): 2.22
• Shares Outstanding: 2,511,031,300
• 10 Day Avg. Volume: 16,337,165
• 30 Day Avg. Volume: 15,967,230
• PEG Ratio: 5.72
• Price to Book (P/B): 3.98
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 11.20
• Enterprise Value/Market Cap: 1.11
• Enterprise Value/Revenue: 0.86
• Enterprise Value/Gross Profit: 4.19
• Enterprise Value/Ebitda: 2.30
• 1Y Price Target: $101.07
• Price Target Upside: 30.28% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 76 Outperform
• Price Target: ―

Merck & Company shows a strong financial foundation, with excellent profitability and cash flow generation. However, technical indicators point to potential short-term challenges, and external factors like tariffs and foreign exchange could impact performance. The company is fairly valued with a good dividend yield, but strategic initiatives may be needed to address revenue and asset base declines.

Positive Factors

Earnings Performance

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

Pipeline Potential

The cardiometabolic and pulmonary pipeline could provide upside for Merck, with promising trials in the second half of the year.

Product Development

Significant unmet need for patients with hypercholesterolemia and the potential advantage in access/ease of use for an oral PCSK9 product bodes well for Merck’s enlicitide.

Negative Factors

Gardasil Challenges

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

Loss of Exclusivity

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

Regulatory Challenges

Significant risk to Merck's strategy to retain Keytruda value due to CMS's draft guidance for Medicare Drug Price Negotiation.

Merck & Company Business Overview & Revenue Model

Company Description

Merck & 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 Money

Merck & 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 displays a robust financial position with strong profitability, efficient cost management, and solid cash generation. The balance sheet is stable with manageable leverage. However, recent declines in revenue and asset base could pose future challenges if trends continue, suggesting a need for strategic initiatives to sustain growth and asset utilization.

Income Statement

Merck & Company has demonstrated consistent revenue growth from $41.52 billion in 2020 to $63.92 billion in TTM (Trailing-Twelve-Months) 2025. The gross profit margin is robust at 81.98% TTM, indicating efficient cost management. Net profit margin is strong at 27.27% TTM, reflecting solid profitability. The EBIT and EBITDA margins at 36.94% and 40.50% TTM, respectively, show a healthy operational performance. However, a slight decline in revenue from 2024 to 2025 suggests potential challenges in sustaining growth.

Balance Sheet

The balance sheet is solid, with a debt-to-equity ratio of 0.72 TTM, indicating a manageable level of leverage. Return on equity (ROE) is impressive at 36.07% TTM, showcasing effective use of shareholder funds. The equity ratio stands at 49.13% TTM, suggesting a stable capital structure. Nonetheless, a decreasing trend in total assets over the recent periods could indicate potential risks in asset management.

Cash Flow

Operating cash flow remains strong at $20.88 billion TTM, supporting healthy free cash flow of $17.04 billion. The free cash flow to net income ratio is substantial, highlighting solid cash generation relative to profits. However, a decrease in free cash flow growth rate from 2024 to 2025 may signal future liquidity pressures if not addressed.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
63.92B	64.17B	60.12B	59.28B	48.70B	41.52B
	Gross Profit
51.75B	48.98B	43.99B	41.87B	35.08B	27.90B
	EBIT
22.87B	22.69B	2.95B	19.40B	13.70B	6.08B
	EBITDA
27.30B	26.94B	6.91B	21.32B	17.90B	10.18B
	Net Income Common Stockholders
17.43B	17.12B	365.00M	14.52B	13.05B	7.07B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.23B	13.69B	7.09B	13.19B	8.10B	8.06B
	Total Assets
115.12B	117.11B	106.67B	109.16B	105.69B	91.59B
	Total Debt
34.84B	37.11B	36.27B	30.69B	33.10B	31.79B
	Net Debt
26.21B	23.87B	29.43B	18.00B	25.01B	23.73B
	Total Liabilities
66.72B	70.73B	69.04B	63.10B	67.44B	66.18B
	Stockholders Equity
48.34B	46.31B	37.58B	45.99B	38.18B	25.32B
Cash Flow		Free Cash Flow
17.04B	18.10B	9.14B	14.71B	9.66B	5.57B
	Operating Cash Flow
20.88B	21.47B	13.01B	19.09B	14.11B	10.25B
	Investing Cash Flow
-7.84B	-7.73B	-14.08B	-4.96B	-16.55B	-9.44B
	Financing Cash Flow
-9.97B	-7.03B	-4.81B	-9.12B	2.59B	-2.83B

Merck & Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 77.58
• 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 MRK, the sentiment is Negative. The current price of 77.58 is below the 20-day moving average (MA) of 79.16, below the 50-day MA of 82.67, and below the 200-day MA of 96.98, indicating a bearish trend. The MACD of -1.53 indicates Negative momentum. The RSI at 45.44 is Neutral, neither overbought nor oversold. The STOCH value of 58.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRK.

Merck & Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NVS	78 Outperform	$214.91B	17.53	32.95%	2.91%	6.30%	-13.28%
AZN	77 Outperform	$216.04B	27.90	19.81%	2.17%	15.48%	22.70%
MRK	76 Outperform	$195.46B	11.33	39.31%	4.10%	4.40%	654.93%
SNY	71 Outperform	$127.76B	21.63	7.34%	2.81%	-4.57%	2.96%
AMGN	70 Outperform	$146.20B	24.82	105.67%	3.36%	15.59%	56.99%
PFE	66 Neutral	$130.99B	16.70	8.62%	7.33%	13.38%	―
Sector *	53 Neutral	$5.14B	3.03	-43.89%	2.83%	16.75%	-0.06%

Merck & Company Corporate Events

Merck & Co. Expands Board with New Director

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.