1. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 96
Merck & Co., Inc. (NYSE:MRK) is a leading global healthcare company that produces medicines for a variety of medical conditions, including cancer, infections, and chronic diseases. It is one of the leading companies providing immunotherapy drugs for cancer.
Recently, the FDA gave approval for KEYTRUDA, the company’s immunotherapy drug, along with carboplatin and paclitaxel for the treatment of primary advanced or recurrent endometrial carcinoma. Earlier, the FDA approved the use of KEYTRUDA for resectable non-small cell lung cancer in combination with other therapies.
Merck & Co., Inc. (NYSE:MRK) reported strong second-quarter results, with total sales increasing 7% to $16.1 billion. Meanwhile, KEYTRUDA saw sales grow by 16%. The company also plans to invest $16 billion in manufacturing and other projects between 2024 and 2028. This investment will support growth in oncology, vaccines, and animal health, fueled by a strong pipeline of new products. The stock has received an average rating of Strong Buy from analysts.
Here’s what Oakmark Equity and Income Fund said about Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 investor letter:
“Merck & Co., Inc. (NYSE:MRK) is a global pharmaceutical firm with leading oncology, vaccine and animal health franchises. Premier products in Merck’s portfolio include Keytruda, Gardasil, Winrevair and Bravecto. Outsized contributor Keytruda is an immuno-oncology drug that treats several cancers and tumors. Keytruda is an astounding clinical and commercial success that is on track to become one of the best-selling prescription drugs to date. Investor angst surrounding Keytruda’s pending U.S. patent expiration in 2028 presented a chance to buy shares at a discounted valuation. We believe opportunities to extend Keytruda’s duration through life cycle management are underappreciated. More importantly, discounted cash flows from products already on market cover today’s entire stock price, meaning there is minimal value ascribed to a promising pipeline with strong sales potential. We believe Merck is led by a capable management team that looks to reinvest these cash flows in an accretive manner.”
Overall, Merck & Co., Inc. (NYSE:MRK) ranks first among the 10 best immunotherapy stocks to buy now. While we acknowledge the potential of immunotherapy companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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