10 Undervalued Wide Moat Stocks to Buy According to Analysts

3) Merck & Co., Inc. (NYSE:MRK)

Average Upside Potential: 21.10%

Forward P/E Ratio (As of September 25): 11.45x

Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company worldwide. It carries out operations via 2 segments, Pharmaceutical and Animal Health.

Merck & Co., Inc. (NYSE:MRK)’s technological lead, large scale, intellectual property, and strong pipeline continue to form its wide economic moat. Moreover, its commitment to innovation further strengthens its wide moat. The combination of a wide line-up of high-margin drugs, together with a pipeline of new drugs, should continue to help Merck & Co., Inc. (NYSE:MRK) generate strong returns on invested capital over the long term. The divestment of the Organon business should work in its favour as the remaining portfolio at the company holds a higher percentage of drugs with strong patent protection.

Moving forward, the company’s scale should continue to be supported by inorganic growth opportunities.  Merck & Co., Inc. (NYSE:MRK) expanded its presence in ophthalmology via the acquisition of EyeBio and it has established leadership in the production animal sector by acquiring Elanco’s aqua business. These acquisitions should help the company broaden its market reach. Merck & Co., Inc. (NYSE:MRK) expects increased patient prescriptions and stock levels for WINREVAIR in Q3 2024.

In Q2 2024, Merck & Co., Inc. (NYSE:MRK) saw a gross margin of 76.8% as compared to 73.2% for Q2 2023. This rise was mainly because of the favorable impact of the product mix (which includes lower royalty rates related to KEYTRUDA and GARDASIL/GARDASIL 9), partially offset by increased amortization of intangible assets. For FY 2024, the company raised and narrowed the expected worldwide sales range to $63.4 billion – $64.4 billion.

According to Insider Monkey’s analysis of 912 hedge funds in Q2 2024, 96 held investments in Merck & Co., Inc. (NYSE:MRK). Cantor Fitzgerald reaffirmed an “Overweight” rating on the shares of Merck & Co., Inc. (NYSE:MRK), setting the price target of $155.00 on 16^th September.

Carillon Tower Advisers, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said:

“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.”