MRK
Merck & Co Inc
Healthcare
09/12/2016
Presented
| Date | 09/08/2016 |
| Price | $63.24 |
| Market Cap | $176.38B |
| Ent Value | $173.22B |
| P/E Ratio | 34.75x |
| Book Value | $15.68 |
| Div Yield | 0.03% |
| Shares O/S | 2,789.00M |
| Ave Daily Vol | 9,968,817 |
| Short Int | 1.13% |
Current
| Price | $111.53 |
| Market Cap | $282.71B |
| Merck & Co., Inc. provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide. It is a global research-driven pharmaceutical company that discovers, develops, manufactures and markets vaccines and medicines to address unmet medical needs. The company operates through the following segments: Pharmaceutical, Animal Health and Alliances. The Pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the company or through joint ventures. Its human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of human disorders. The company sells these products primarily to drug wholesalers and retailers, hospitals, government agencies and managed health care providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. Its vaccine products consist of preventive pediatric, adolescent and adult vaccines, primarily administered at physician offices. The company sells these vaccines primarily to physicians, wholesalers, physician distributors and government entities. The Animal Health segment discovers, develops, manufactures and markets animal health products, including vaccines, which it sells to veterinarians, distributors and animal producers. The Alliances segment includes revenue from the company relationship with AstraZeneca LP. The company was founded in 1851 and is headquartered in Kenilworth, NJ. |
Publicly traded companies mentioned herein: Bristol-Myers Squibb Inc (BMY), Merck & Co Inc (MRK), Novo Nordisk A/S (NVO)
Highlights
In the presenter’s opinion Merck (MRK) has been out of favor with investors for some time. It trades at the second cheapest multiple (16x 2016 EPS estimates) among its peers, but recently the situation (and sentiment) has started to change “a bit”. Bristol-Myers’ early August “stumble” with nivolumab (Opdivo, which failed a late-stage trial in patients with previously untreated lung cancer) has led Street analysts to take estimates for Opdivo down by~$2 billion. As of now, the consensus estimate for Opdivo sales stands at ~$10.5 billion in 2020, said the presenter. However, MRK’s checkpoint inhibitor - pembrolizumab (Keytruda) - is also being developed for lung cancer and has seen its sales estimates raised slightly, but the consensus is still at $5 billion for 2020. He views this as a mistake because MRK may see Keytruda approved for first-line non-small cell lung cancer (NSCLC) before Opdivo and its EPS estimates could rise 10% - 15%. As such, he is long the stock and sees the potential for shares to rise by 20% - 30% over the next 12 months (assuming the same multiple framework holds and sentiment improves).
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