We recently published a list of the 10 Best Vaccine Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against the other best vaccine stocks to buy now.
What Will Trump’s Tariffs Mean for the Pharma Industry?
On February 24, CNBC reported that President Trump declared that sweeping US tariffs on imports from Mexico and Canada “will go forward” in a statement before the expiry of their month-long delay on their implementation. When asked about the postponed tariffs at a White House press conference, President Trump said:
“The tariffs are going forward on time, on schedule.”
He claimed that foreign nations have been taking advantage of the US in “just about everything,” reiterating his plans to impose “reciprocal tariffs.”
“So the tariffs will go forward, yes, and we’re going to make up a lot of territory,” Trump said.
On February 21, Jared Holz, Mizuho Securities America’s healthcare sector strategist, appeared on CNBC to talk about these tariffs and the ways they could affect the US pharmaceutical sector. Although he was unclear about the exact intention behind these tariffs, he said that he did not consider the pharmaceutical industry to be all that special with respect to other verticals, including technology and industrials, such that President Trump would intend to enlarge its presence in the US.
To him, the tariffs are not just about the generics or branded but are rather more about how the biotech or pharmaceutical industry fits into the grander plans around scaling up domestic manufacturing. Most biotech and pharma companies have a significant presence in the US. However, questions of whether they will hire more people in the US compared to Europe or Asia and whether they will bring back more business to America still stand without answers.
READ ALSO: 10 Best Performing Pharma Stocks So Far in 2025 and 10 Oversold Pharma Stocks to Buy According to Analysts.
Tariffs and On-Shore Capacity in the US
Although Holz was unclear about the answers to such questions, he did say that anything coming out of Europe or China would obviously be fair game. The pharmaceutical companies would say that the Inflation Reduction Act (IRA) as part of the Biden administration is incredibly crippling, and the business that needs to be tied up to make the earnings based on that is very challenging for the sector. Adding Trump’s tariffs to the list would complicate the sector possibly more than others, with the tariffs acting as a “third strike” against the US pharma sector.
Delving deeper into the topic, Holz said that building up manufacturing capacities and facilities from scratch is not as easy as it sounds and requires multiple years to reach a point where companies can produce at a high rate. Therefore, he is unclear about the impact of tariffs on the production capacity and on-shoring of pharma companies.
We recently discussed what Trump’s tariffs could mean for the healthcare industry and looked at another analyst’s perspective on the topic in a recently published article on 12 Most Oversold Healthcare Stocks to Buy Now. Here is an excerpt from the article:
“Since more and more companies in the US are looking towards China for deals regarding the next promising molecule, whether in the obesity or cancer space, the impact of tariffs on this ongoing trend has become a subject of significant discussion in the healthcare industry. On February 7, Carlo Rizzuto, Versant Ventures managing director, appeared on CNBC’s ‘Fast Money’ to discuss the impact of tariffs on healthcare. Rizzuto believed that there are two ways in which tariffs could impact the industry. The first would be products innovated in China and brought over to the US or other markets. To understand how the tariffs would affect such trade processes, the industry would have to see how the tariffs are actually structured in the market.
Secondly and more tangibly, China is a massive center for contract research and manufacturing for the US healthcare industry. Therefore, anything that increases that cost is likely to make the market conditions more challenging. The healthcare industry is already under pressure in terms of investor sentiment, and an increase in cost is not going to help its functioning.”
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 vaccine stocks. We then selected the top 10 most popular stocks among elite hedge funds as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a person’s hand holding a bottle of pharmaceuticals.
Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 91
Merck & Co., Inc. (NYSE:MRK) is a biopharmaceutical company that delivers health solutions to advance the treatment and prevention of diseases in animals and people. Its Pharmaceutical segment offers vaccines and human health pharmaceutical products, which typically consist of therapeutic and preventive agents. Its Animal Health segment develops, discovers, manufactures, and markets a range of vaccines and veterinary pharmaceutical products.
Merck & Co., Inc.’s (NYSE:MRK) pipeline lends it a competitive market advantage, with around 20 potential new growth drivers holding blockbuster potential. Its late-stage pipeline in infectious diseases, oncology, and cardiometabolic further bolsters its future outlook. The company’s strong commercial execution, diversified portfolio, and innovative pipeline lend it resilience against short-term headwinds, positioning it as an attractive investment with a solid long-term growth trajectory.
The company recently announced it has received European Commission conditional approval for WELIREG (belzutifan), the first oral HIF-2α inhibitor in the EU, for the treatment of adult patients with von Hippel-Lindau (VHL) disease and advanced clear cell renal cell carcinoma.
Although the company is experiencing some headwinds, such as temporarily stopping the shipments of its HPV vaccine Gardasil to China until mid-2025 due to weak discretionary spending, it has strong operations. These are supported by robust demand for its diverse and innovative portfolio. Its Keytruda drug for cancer treatment is performing well, and the launch of Winrevair, a drug that treats pulmonary arterial hypertension (PAH), is also boosting revenue growth for the company.
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.”
Overall, MRK ranks 4th on our list of the best vaccine stocks to buy according to hedge funds. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an 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.
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Disclosure: None. This article is originally published at Insider Monkey.