1. Merck & Co., Inc. (NYSE:MRK)
P/E Ratio: 9.35
Average Analysts Upside: 38.54%
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company with two segments: pharmaceutical and Animal Health. Over the last six months, MRK shares have plunged by just under 27% due to the company’s weaker-than-expected 2025 revenue guidance. Projected revenue of $64.1 billion to $65.6 billion fell short of analyst estimates of $67.31 billion.
The company has been struggling with its HPV vaccine, Gardasil. Merck has temporarily halted shipments of Gardasil to China until mid-2025, negatively impacting its revenue outlook. The Chinese market remains a key growth driver for many pharmaceutical companies, but Merck’s challenges in the region continue to negatively impact its stock.
Despite these short-term challenges, Merck & Co., Inc. (NYSE:MRK) remains resilient and delivered a robust performance in 2024. In FY2024, Merck posted a revenue of $15.62 billion, beating estimates of $15.49 billion. The company’s innovative portfolio remains a key driver for MRK, with Keytruda performing exceptionally well. Moreover, the launch of Winrevair further bolstered revenue growth in 2024. The company’s Animal Health division also posted impressive results, achieving 13% sales growth in 2024.
GreensKeeper Asset Management, an investment management company, released its Q3 investor letter. Here is what the fund said about MRK in the investor letter:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
While we acknowledge the potential of MRK to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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