4) Merck & Co., Inc. (NYSE:MRK)
Average Upside Potential: ~24.6%
Forward P/E as of February 28: ~10.2x
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company. The company has a wide economic moat, which stems from its patents, economies of scale, and a powerful intellectual base. It continues to make investments in expanding KEYTRUDA’s indications, extending its lifecycle and market dominance. Merck & Co., Inc. (NYSE:MRK)’s healthy track record in oncology and a deep pipeline of candidates place it well to maintain a strong market presence.
In a significant development, the company announced that the US FDA has accepted for priority review a new supplemental Biologics License Application (sBLA) seeking approval for KEYTRUDA® (pembrolizumab), Merck & Co., Inc. (NYSE:MRK)’s anti-PD-1 therapy, for the treatment of patients with resectable locally advanced head and neck squamous cell carcinoma (LA-HNSCC) as neoadjuvant treatment, then continued as adjuvant treatment in combination with standard of care radiotherapy with or without cisplatin and then as the single agent. Merck & Co., Inc. (NYSE:MRK)’s 2024 results were aided by demand for its innovative portfolio, which includes KEYTRUDA, which has been benefiting more patients with cancer globally, the successful roll-out of WINREVAIR and healthy performance of its Animal Health business.
Merck & Co., Inc. (NYSE:MRK) continues to progress its pipeline, advance key clinical programs and augment the pipeline via promising business development. Therefore, it expects FY 2025 sales of $64.1 billion to $65.6 billion and non-GAAP gross margin of ~82.5%. GreensKeeper Asset Management, an investment management company, released its Q3 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.”
