11 Most Undervalued Quality Stocks to Buy Now

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

Forward P/E Ratio as of April 14: 8.8

Number of Hedge Fund Holders: 91

Merck & Co Inc. (NYSE:MRK) is a pharmaceutical and animal health healthcare company. It offers human health pharmaceuticals for areas like oncology, vaccines, hospital acute care, cardiovascular, virology, neuroscience, and diabetes. It also offers veterinary pharmaceuticals, vaccines, and health management solutions and services.

On February 24, DBS analyst Nico Chen maintained a $100 price target on the company while reiterating a Buy rating. The analyst’s sentiment primarily came from Keytruda’s rapid growth. Keytruda is Merck’s blockbuster anti-PD-1 therapy which is used in the treatment of multiple cancer types. Keytruda sales rose by 18% year-over-year in 2024 to generate a total of $29.5 billion. In Q4 alone, these sales rose by 21% and made $7.8 billion.

Keytruda sales are driven by global demand across both metastatic and earlier-stage cancers. Merck & Co. (NYSE:MRK) has secured regulatory approvals for Keytruda-based regimens in China, Japan, and the US. It will now be seeking regulatory approval for other treatments by mid-2025. One of these includes the investigational doravirine/islatravir (DOR/ISL) two-drug HIV-1 regimen. This treatment proved as effective as standard therapies in two studies of adults with controlled HIV after 48 weeks.

GreensKeeper Asset Management stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q3 2024 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.”