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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on MRK

Merck & Co., Inc.'s recent performance was driven by several positive factors. The company's Q3 earnings exceeded expectations, and the FDA approved a new formulation of Keytruda, a top-selling cancer treatment. Additionally, Wells Fargo upgraded the stock to "overweight" with a price target hike to $125. Merck's resilient revenue mix, expanding profitability, and stellar capital allocation also contributed to its appeal. Institutional investors, such as Boston Research & Management Inc. and Baltimore Washington Financial Advisors Inc., have increased their stakes in the company. A $9.2B deal with Cidara also boosted pipeline wins.

1.c. Company Highlights

2. Merck's Q3 Earnings: A Strong Beat on Revenue and EPS

Merck & Co., Inc.'s third-quarter revenue was $17.3 billion, a 4% increase, or 3% excluding foreign exchange impact. The company's gross margin was 81.9%, and operating expenses decreased to $6.6 billion. Earnings per share were $2.58, beating estimates of $2.36. The strong EPS performance was driven by the company's robust sales growth, particularly in its oncology segment, where KEYTRUDA sales grew 8% to $8.1 billion.

Publication Date: Nov -01

📋 Highlights

Segment Performance

The company's vaccines segment saw a 25% decrease in GARDASIL sales to $1.7 billion, but CAPVAXIVE pneumococcal vaccine sales were $244 million. ENFLONSIA, for RSV protection, had $79 million in sales, mainly from initial stocking. Animal Health sales grew 7%, with livestock sales up 14% and companion animal sales down 3%. The oncology segment's strong performance was driven by demand in metastatic and earlier-stage cancers, with KEYTRUDA QLEX, a subcutaneous administration option, being approved by the FDA and launched at the end of the quarter.

Guidance and Outlook

For 2025, Merck expects revenue of $64.5 billion to $65 billion, representing 1% to 2% growth, and EPS of $8.93 to $8.98. The company has a robust pipeline, with approximately 80 Phase III trials underway and over $50 billion in revenue potential by the mid-2030s. Merck completed the acquisition of Verona Pharma and announced a $70 billion investment in U.S. manufacturing and R&D.

Valuation

Merck's current P/E Ratio is 13.12, indicating a relatively reasonable valuation. The company's ROE is 34.88%, and ROIC is 18.28%, demonstrating strong profitability. With a Dividend Yield of 3.77%, Merck offers an attractive income stream. Analysts estimate next year's revenue growth at 4.8%, which is slightly higher than the company's guided range. The stock's EV/EBITDA ratio is 9.67, suggesting a moderate valuation.

Pipeline Progress

Merck reported positive results from several clinical trials, including the Phase II/III REJOICE-Ovarian01 study evaluating R-DXd in patients with platinum-resistant ovarian cancer. The company's 21-valent pneumococcal conjugate vaccine, CAPVAXIVE, was approved in the US, EU, and Japan. Additionally, ENFLONSIA, a long-acting monoclonal antibody for the prevention of RSV disease in infants, was approved in the US and received a positive CHMP opinion in the EU.

Future Growth Drivers

In 2026, Merck expects solid top-line growth, driven by new launches, including WINREVAIR, OHTUVAYRE, CAPVAXIVE, and ENFLONSIA, as well as continued growth from its Animal Health business. The company's KEYTRUDA franchise is expected to experience slower growth, but the subcutaneous formulation, QLEX, is expected to achieve 30-40% patient adoption within 18-24 months.

3. NewsRoom

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Halozyme Granted Injunction Against Merck & Co. in Germany in Keytruda Patent Case

Dec -04

Source: wsj.com

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Pliant Cancer Drug Boosts Responses When Paired With Merck's Blockbuster Keytruda In Tough-To-Treat Tumors

Dec -04

Source: benzinga.com

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Can Merck's New Products Aid Growth as Keytruda LOE Test Looms?

Dec -04

Source: zacks.com

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First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

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Merck & Co., Inc. $MRK Shares Sold by Groupe la Francaise

Dec -04

Source: defenseworld.net

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Merck & Co., Inc. (NYSE:MRK) Trading 1.3% Higher After Analyst Upgrade

Dec -04

Source: defenseworld.net

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3 Potential Mid-Cap Biotech Buyout Targets In 2026

Dec -03

Source: seekingalpha.com

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Merck & Co., Inc. (MRK) Presents at Citi Annual Global Healthcare Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.59%)

6. Segments

Pharmaceutical

Expected Growth: 4.5%

Merck's pharmaceutical segment is driven by its robust pipeline, including cancer therapies such as Keytruda, and its vaccines business, which is expected to benefit from increased demand for HPV and other vaccines.

Animal Health

Expected Growth: 5.2%

Merck's Animal Health division growth is driven by increasing pet ownership, rising demand for livestock products, and advancements in animal health technologies.

Unallocated Other Revenues

Expected Growth: 6.3%

Merck's unallocated other revenues are driven by Alliance revenue, including collaborations with AstraZeneca and Sanofi, as well as royalties from its vaccine and pharmaceutical products.

7. Detailed Products

Gardasil

Human Papillomavirus (HPV) vaccine to prevent cervical, vulvar, and vaginal cancers and genital warts

Keytruda

Anti-PD-1 therapy for the treatment of various types of cancer, including melanoma, lung cancer, and kidney cancer

Januvia

DPP-4 inhibitor for the treatment of type 2 diabetes

Isentress

Integrase inhibitor for the treatment of HIV-1 infection

Zepatier

Direct-acting antiviral for the treatment of chronic hepatitis C

Bridion

Neuromuscular blocking agent reversal agent

Noxafil

Antifungal medication for the treatment of invasive aspergillosis and mucormycosis

8. Merck & Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Merck & Co., Inc. faces moderate threat from substitutes due to the presence of alternative treatments and generic drugs in the market.

Bargaining Power Of Customers

Merck & Co., Inc. has a diverse customer base, which reduces the bargaining power of individual customers, making it a low threat.

Bargaining Power Of Suppliers

Merck & Co., Inc. relies on a network of suppliers for raw materials and services, but has some bargaining power due to its large scale of operations.

Threat Of New Entrants

The pharmaceutical industry has high barriers to entry, including significant R&D investments and regulatory hurdles, making it a low threat for Merck & Co., Inc.

Intensity Of Rivalry

The pharmaceutical industry is highly competitive, with many established players, making the intensity of rivalry a high threat for Merck & Co., Inc.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 48.46%
Debt Cost 5.95%
Equity Weight 51.54%
Equity Cost 5.95%
WACC 5.95%
Leverage 94.04%

11. Quality Control: Merck & Co., Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Gilead Sciences

A-Score: 6.5/10

Value: 3.3

Growth: 3.0

Quality: 8.6

Yield: 7.0

Momentum: 9.0

Volatility: 8.3

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A-Score: 6.4/10

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Growth: 4.0

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Yield: 6.0

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Merck

A-Score: 5.9/10

Value: 4.8

Growth: 6.2

Quality: 7.8

Yield: 7.0

Momentum: 1.5

Volatility: 8.3

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A-Score: 5.6/10

Value: 5.0

Growth: 3.9

Quality: 6.4

Yield: 8.0

Momentum: 2.0

Volatility: 8.3

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Amgen

A-Score: 5.4/10

Value: 2.9

Growth: 5.2

Quality: 6.8

Yield: 6.0

Momentum: 3.0

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Lilly

A-Score: 4.4/10

Value: 2.0

Growth: 7.2

Quality: 6.9

Yield: 2.0

Momentum: 2.5

Volatility: 5.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

99.72$

Current Price

99.72$

Potential

-0.00%

Expected Cash-Flows