10 Best Stocks to Buy According to Billionaire D.E. Shaw

6. Merck & Co. Inc. (NYSE:MRK)

D.E. Shaw & Co’s Stake Value: $767.79 Million

Number of Hedge Fund Holders: 86

Merck & Co. Inc. (NYSE:MRK) is a healthcare company that offers pharmaceutical products for human health in the areas of oncology, neuroscience, and diabetes, among others. Its lead product is Keytruda, a lead cancer drug approved for 40 different oncology indications. The medicine may be approved for a number of new indications, including small-cell lung cancer and ovarian cancer, with continued clinical trials and increased research and development (R&D) funding.

Merck & Co. Inc. (NYSE:MRK) is already looking into the future as it looks to reduce its reliance on Keytruda. The company already has more than 30 programs in phase clinical trials, with an additional 80 in phase 2 trials. The company has also moved to strengthen its prospects in the weight loss business by signing a licensing agreement with Chinese biopharma Hansoh Pharma.

The deal paves the way for the company to commercialize the Chinese company’s oral weight loss candidate HS 10535. Hansoh will get an upfront payment of $112 million from Merck & Co. Inc. (NYSE:MRK), with additional milestone payments of up to $1.9 billion possible.

Merck & Co. Inc. (NYSE:MRK) sees potential in HS-10535, which is still in the experimental stage, and this is reflected in the financial terms of the agreement. The company’s dedication to expanding its R&D pipeline in a therapeutic area with substantial unmet medical needs is demonstrated by the upfront payment and subsequent milestone payments.

Oakmark Equity and Income Fund stated the following regarding 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.”