Merck KGaA: Aiming for 2024 Rebound and Maintaining Longer-Term Goals

In what could be a positive sign for our thesis on the life science industry, narrow-moat Merck KGaA highlighted at its investor day that it expects to return to growth in 2024 and maintained its longer-term goals as well, including its goal for about EUR 25 billion in sales in 2025. Like us, management appears to believe that the 2023 reset period is an anomaly that will start reversing in 2024, and at first glance, we do not expect to make changes to our fair value estimates (EUR 171/$38) since our views are largely reflected in management's goals. Merck shares continue to trade moderately below fair value, in our opinion.