8 Most Promising Healthcare Stocks According to Hedge Funds

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

Number of Hedge Fund Holders: 86

Merck & Co., Inc. (NYSE:MRK), known as MSD outside of North America, is a global pharmaceutical giant that develops, manufactures, and markets prescription medicines, vaccines, and animal health products. The company’s primary focus is on creating innovative solutions for some of the world’s most challenging health issues, including cancer, infectious diseases, and cardiovascular disorders.

The company’s cancer medication Keytruda, which rose to the top of the global medicine sales charts, is the main focus of its long-term prospects. The pharmaceutical company’s second-quarter revenue of $16.1 billion represented a 7% rise over the prior year. Keytruda’s $7.3 billion in sales represented a 16% rise over the same time last year.

Although a significant amount of Merck & Co., Inc.’s (NYSE:MRK) revenue comes from Keytruda, the firm has been attempting to expand its pipeline and reduce its need for the enormously popular blockbuster drug. To compensate for the lost revenue, new drugs like WINREVAIR, which treats pulmonary arterial hypertension, will be essential.

By 2029, analysts estimate that the company’s sales will have surpassed $6 billion and peaked at a significantly higher $11 billion. Although Winrevair and other resources may mitigate the impact on Merck & Co., Inc. (NYSE:MRK) and perhaps ensure a rise in sales, these numbers are not similar to those of Keytruda. A more modest growth stimulus is the pneumococcal vaccination Capvaxive, which regulators approved earlier this year. Sales could reach over $1 billion by 2027.

To co-develop three of its antibody-drug conjugates, Merck & Co., Inc. (NYSE:MRK) agreed to pay Japanese company Daiichi Sankyo $5.5 billion last year, increasing its investment in cancer treatments. Consequently, the company should be able to expand its operations even after the patents for Keytruda expire, given the abundance of opportunities available and the potential for even more in the future.  As of Q3 2024, 86 hedge funds in Insider Monkey’s database held stakes in Merck & Co., Inc. (NYSE:MRK), with Fisher Asset Management being the largest stakeholder with stakes worth over $1.6 billion.

Regarding Merck & Co., Inc. (NYSE:MRK), Carillon Tower Advisers’ Carillon Eagle Growth & Income Fund  made the following statement in its investor letter for the first quarter of 2024:

“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.”