/Merck%20%26%20Co%20Inc%20logo%20and%20pill-by%20viewimage%20via%20Shutterstock.jpg)
Based in Rahway, New Jersey, Merck & Co., Inc. (MRK), a global healthcare leader with a market cap of $284.5 billion, operates in the pharmaceutical and animal health sectors. The company is renowned for its diverse portfolio, including the PD-L1 inhibitor Keytruda, and engages in innovative collaborations and acquisitions to drive growth and enhance its product offerings.
Shares of the pharmaceutical giant have underperformed the broader market over the past 52 weeks. MRK has gained 5.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 17%. In 2024, shares of MRK are up nearly 2%, lagging behind the SPX's 9.9% YTD returns.
Looking closer, MRK has fallen short of the US Pharmaceuticals Ishares ETF's (IHE) 11.5% returns over the past 52 weeks.
Merck's underperformance can be attributed mainly to increased competition for diabetes drugs and challenges in revenue growth. Despite surpassing earnings expectations for Q2, the stock fell 9.8% on Jul. 30 due to lower-than-expected sales of the Gardasil vaccine, affected by shipment issues in China. The company’s reduced adjusted profit guidance, reflecting one-time charges from recent acquisitions, also contributed to investor concerns.
For the current fiscal year, ending in December, analysts expect MRK's EPS to grow 432.5% year over year to $8.04. The company's earnings surprise history is promising. It has a solid track record of consistently surpassing the consensus estimates in the last four quarters.
Among the 24 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 22 “Strong Buy” ratings and two “Holds.”
This configuration is more bullish than three months before, with 20 analysts suggesting a "Strong Buy."
On Jul. 11, Morgan Stanley raised its price target on Merck to $134, maintaining an "Equal Weight" rating. It expects that an initial boost in Q2 of the Winrevair/Sotatercept PAH launch could help exceed annual consensus estimates.
The mean price target of $140.64 represents a premium of 26.5% to MRK's current levels. The Street-high price target of $155 implies a potential upside of 39.5%.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
