13 Most Undervalued Blue Chip Stocks To Buy According To Analysts

6. Merck & Co., Inc. (NYSE:MRK)

Forward P/E, as of September 22: 14.4

Analyst Upside Potential, as of September 22: 20%

Number of Hedge Fund Holders: 96

Merck & Co., Inc. (NYSE:MRK) ranks sixth on our list of the most undervalued blue chip stocks to buy according to analysts. Merck & Co., Inc. (NYSE:MRK), a pharmaceutical giant in the United States, specializes in the production of vaccines and the provision of hospital care services.

The company has over 52 drugs in rotation in the United States reaching over 500 million people in 2023 alone. The company’s leading cancer drug, which received approval in 2014, brought in $26.3 billion in sales in 2023. Coming to Q2 2024, the star drug logged $7.3 billion in sales, growing 16% year-over-year.

The company is not just a leading drug provider, but it is also strongly inclined to expand. Recently, the company closed the acquisition of EyeBio, expanding its presence in the ophthalmology industry. The acquisition will help the company invent a treatment for retinal conditions. Its Animal Health segment also closed the acquisition of Elanco’s aqua business, presenting Merck & Co., Inc. (NYSE:MRK) as a leader in the animal health business.

Merck & Co., Inc.’s (NYSE:MRK) commitment to innovation makes it a dominant player in the industry, given that it spent $30.5 billion in research and development expenses in 2023. In addition to that, its large infrastructure allows Merck to make drugs and vaccines at a lower cost compared to smaller companies, giving it a solid competitive edge.

Analysts are bullish on MRK and their 12-month median price target of $140 points to a 20% upside from current levels. In Q2 2024, there were 96 hedge funds that held positions in the stock with total stakes amounting to $7.76 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $1.77 billion.

Baron Funds’ Baron Health Care Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its first quarter 2024 investor letter:

“Global pharmaceutical company Merck & Co., Inc. (NYSE:MRK), Inc. contributed on the continued growth of Keytruda, the company’s key asset and the leading immuno-oncology agent used to treat a variety of cancers. The FDA’s late March approval of pulmonary arterial hypertension drug sotatercept, also drove share gains. We retain conviction as Merck has started to transition from prioritizing its Keytruda franchise to building a more diversified business, with a focus on the Gardasil vaccine, pneumococcal vaccine development, and cardiovascular drug development, well in advance of the scheduled expiration of patent protection/exclusivity rights.”