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Merck KGaA ADR MKKGY

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Merck KGaA Highlights Strong Preliminary Q1 Results and Raises 2021 Outlook; No FVE Change

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Narrow-moat Merck KGaA released preliminary results for the first quarter that allowed it to raise its outlook for 2021. Although few details were released, we suspect most of this outperformance was related to its life science business where Merck continues to benefit from efforts to develop tests, vaccines, and treatments for COVID-19. However, after just raising our fair value estimate materially in March, at first glance, these strong near-term trends do not appear substantial enough from a cash flow perspective to change our fair value estimate, which is driven by much longer-term assumptions.

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Company Profile

Business Description

Merck KGaA operates in three main segments: life sciences, performance materials, and healthcare. The life sciences segment (43% of 2020 sales) provides laboratory consumables and instruments to researchers in academia and applied fields, including the biopharmaceutical industry. In the healthcare segment (38%), Merck develops, manufactures, and sells branded pharmaceuticals with significant therapeutic concentrations in oncology, multiple sclerosis, and fertility. In its electronics segment (19%), the company offers specialty materials to manufacture a variety of products, such as semiconductors, flat-screen televisions, automobiles, and cosmetics. In 1995, the E. Merck KG family publicly sold part of the company, resulting in the current 30% public ownership of the firm.

Contact
Frankfurter Strasse 250
Darmstadt, 64293, Germany
T +49 6151720
Sector Healthcare
Industry Drug Manufacturers - Specialty & Generic
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 58,096