We recently published a list of 10 Best Medical Stocks to Buy Now. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other best medical stocks to buy now.
Navigating the Healthcare Landscape: Investment Opportunities and Growth Trends
The medical and healthcare industry is one of the largest globally, with a steady demand for products and services due to the biological nature of humans. Stocks like Pfizer Inc. (NYSE:PFE) and Tenet Healthcare Corporation (NYSE:THC) are among the biggest in the world, benefiting from trends that arise during crises like the coronavirus pandemic. Following the pandemic’s rapid spread in 2020, investors were eager to identify the best medical stocks to navigate the global healthcare crisis.
This industry is highly capital-intensive and competitive, encompassing various subsectors, including pharmaceutical companies, healthcare plan providers, medical equipment manufacturers, and hospitals. While healthcare plan providers and pharmaceutical firms often capture consumer attention, hospitals tend to be overlooked, despite their status as publicly traded entities. According to McKinsey, the medical industry’s overall profits are projected to grow at a compound annual growth rate (CAGR) of 4%, increasing from $654 billion in 2021 to $790 billion by 2026. Notably, the hospital sector is expected to grow at a remarkable CAGR of 12.5%, reaching $2 trillion by 2028. Similarly, the pharmaceutical manufacturing segment, valued at $358 billion in 2020, is forecasted to surge to $1.2 trillion by 2030, reflecting a CAGR of 13%.
Over time, medical companies such as Pfizer and Moderna, Inc. (NASDAQ:MRNA), a biotechnology company based in Cambridge, Massachusetts, were among the most sought-after due to their vaccines. On the stock market, Moderna’s shares increased by an astounding 429% between December 2019 and September 2021. This outcome demonstrates that even modest wagers placed at the ideal moment can provide investors from all backgrounds with large returns. During the same period, Pfizer’s stock saw a more moderate 50% gain; nevertheless, the gap in gains is comprehensible given that Pfizer currently has a market value of more than four times that of Moderna, at $155 billion.
Our Methodology
For our methodology, we first sifted through the US pharmaceutical, medical devices, and healthcare ETFs and selected stocks that were weighted the highest. After choosing these stocks, we ranked them based on their total number of hedge fund holders as of Q2 2024.
“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 275% since May 2014, beating its benchmark by 150 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: 96
Merck & Co., Inc. (NYSE:MRK) is a U.S.-based pharmaceutical company that focuses on producing vaccines and providing hospital care services. Its top-selling cancer drug, Keytruda, is a standout product with global recognition.
In Q2 2024, Merck & Co., Inc. (NYSE:MRK)’s Human Health business grew by 11%, Animal Health sales rose 6%, and its cancer drug KEYTRUDA saw a 21% increase, reaching $7.3 billion. GARDASIL sales increased 4% to $2.5 billion, and VAXNEUVANCE grew 16% to $189 million. The company benefited from rapid international launches. Merck’s new pneumococcal vaccine, CAPVAXIVE, received FDA approval and an ACIP recommendation, while its acquisition of EyeBio marks a venture into ophthalmology. Additionally, Merck’s Animal Health unit acquired Elanco’s aqua business. Merck also launched WINREVAIR, a new vaccine for pulmonary arterial hypertension, generating $70 million in sales.
As of Q2 2024, from the total number of hedge funds that Insider Monkey tracked, 96 held stakes in the stocks with Fisher Asset Management being the largest stakeholder with shares worth $$1,766,132,800. Analysts are also bullish on MRK giving it a Strong Buy rating. 19 Wall Street analysts have set a 12-month average price target of $140.64 for Merck & Co., with forecasts ranging from $125.00 to $155.00, indicating a potential 22.58% increase from the current price of $114.73. This makes MRK one of the best medical stocks according to analysts.
Regarding Merck & Co., Inc. (NYSE:MRK), Baron Funds’ Baron Health Care Fund made the following statement in its investor letter for the first quarter of 2024:
“Global pharmaceutical company Merck & Co., Inc. (NYSE:MRK), Inc. contributed to 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.”
Overall, MRK ranks 4th on our list of best medical stocks to buy now. 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 timeframe. 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.