10 Most Undervalued Quality Stocks To Buy According To Analysts

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

Average Upside Potential: 27.54%

Forward Price-to-Earnings Ratio: 10.96

Number of Hedge Fund Holders: 96

Merck & Co. Inc. (NYSE:MRK) is a global healthcare company that delivers innovative health solutions through its prescription medicines, vaccines, biological therapies, and animal health products. It has a strong focus on research and development, and its products are used to treat a wide range of diseases, including cancer, infections, and cardiovascular disorders.

Earlier this year, its revenue grew 7.16% in Q2 2024, driven by growth in all business segments. Human Health grew 11%, Animal Health grew 6%, and KEYTRUDA sales rose 21%. Vaccines like GARDASIL and VAXNEUVANCE grew by 4% and 16%, respectively. However, the expiration of KEYTRUDA’s patent in 2028 could impact future growth.

It received FDA approval and ACIP recommendation for its new pneumococcal conjugate vaccine, CAPVAXIVE, for adults. The WINREVAIR vaccine for adult patients with pulmonary arterial hypertension was also approved and generated $70 million+ in sales during the quarter. The company acquired Elanco’s aqua business to become a leader in animal health and acquired EyeBio in July to enter the ophthalmology market and develop treatments for retinal conditions.

On October 1, the company completed the acquisition of CN201, a bispecific antibody for the treatment of B-cell-associated diseases. CN201 is currently being investigated in clinical trials for NHL and ALL. Merck & Co. Inc. (NYSE:MRK) recorded a pre-tax charge of ~$750 million related to the acquisition, which will be included in Q3 non-GAAP results.

It’s poised for continued growth due to its international expansion, diverse drug portfolio, and strong financial results. The acquisition of Harpoon Therapeutics is expected to strengthen its oncology pipeline and create opportunities for new combination therapies. Hence, Merck & Co. Inc. (NYSE:MRK) is rather well-positioned for success.

Carillon Eagle Growth & Income Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its first quarter 2024 investor letter:

“After posting lackluster returns in 2023, Merck & Co., Inc. (NYSE:MRK) got off to a strong start in January by raising the long-term sales forecasts for its oncology and cardiology pipelines and reporting solid fourth-quarter results, coupled with strong financial guidance for 2024. Merck shares also finished the quarter strong after receiving U.S. Food and Drug Administration approval in late March for a new cardiology medicine with the potential to contribute significantly to sales growth over the next several years.”