1) Merck & Co., Inc. (NYSE:MRK)
52-week Low: $94.48
Price as of 24 January: $95.55
Number of Hedge Fund Holders: 86
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company. The company’s stock has been facing pressures as a result of headwinds such as declining sales of the human papillomavirus (HPV) vaccine, Gardasil, and diabetes drug, Januvia. Much of the decline in the stock price came due to the poor performance of the broader drug and biotech sector after Donald Trump chose Robert F. Kennedy Jr., a vaccine skeptic, as the next secretary of the Department of Health and Human Services. Despite the challenges, on January 14, Jefferies analyst Akash Tewari maintained a “Buy” rating on shares of Merck & Co., Inc. (NYSE:MRK), with a price target of $150.
This rating was supported by Merck & Co., Inc. (NYSE:MRK)’s plans to roll out a subcutaneous (under the skin) version of Keytruda earlier than anticipated. To give a brief context, a subcutaneous version of Keytruda refers to the reformulated version of the company’s cancer immunotherapy drug, designed to be administered as an injection under the skin instead of the current intravenous infusion. As per the analyst, the decision to accelerate the program is expected to allow Merck & Co., Inc. (NYSE:MRK) to capture greater market share and garner robust revenue. Furthermore, the analyst remains optimistic about the company’s strategic upgrades to other therapeutics.
The company has a strong position in the oncology market, mainly because of the success of Keytruda. GreensKeeper Asset Management, an investment management company, released its third-quarter investor letter. Here is what the fund said:
“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 as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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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