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Merck & Co Inc

MRK: XNYS (USA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
$661.00FnfyWsxnstn

Merck Earnings: Solid Results Led by Keytruda; Firm Working to Mitigate Eventual Biosimilar Pressure

We are maintaining our $103 fair value estimate for Merck after third-quarter results that were slightly higher than we projected, but some of the outperformance was due to robust international sales of COVID-19 treatment Lagevrio that seem unlikely to continue. The underlying core business looks solid, with operational sales growth of 8% (excluding Lagevrio), led by cancer drug Keytruda (up 17%). Merck’s steady pipeline innovation, especially the movement of Keytruda into earlier lines of lung cancer, should enable a 5% annual compound growth rate over the next five years. Further, Merck’s earnings should grow faster as royalty payments on human papillomavirus vaccine Gardasil and Keytruda fall in 2024.

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