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Merck KGaA MRK

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€142.00 −2.45 (1.70%)
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Merck KGaA: No Fair Value Estimate Change Even as Evobrutinib Fails in Phase 3 Trials

Julie Utterback

Narrow-moat Merck KGaA announced that its multiple sclerosis candidate evobrutinib had failed in two Phase III trials. We have fully removed probability-weighted sales of that drug candidate from our model. However, when considering cash flows generated by the conglomerate since our last valuation change in May, our fair value estimates (EUR 171/$38) for Merck have not changed materially. Shares appeared about fairly valued prior to this announcement, but we would not be surprised to see shares fall into undervalued territory on this disappointing news.

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Price vs Fair Value

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MRK is trading within a range we consider fairly valued.
Price
€142.00
Fair Value
€345.00
Uncertainty
Medium
1-Star Price
€286.23
5-Star Price
€489.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

In the long run, Merck's life sciences segment should continue to benefit from expanding pharmaceutical pipelines as a key supplier to those firms' R&D and manufacturing operations.

Bears

Merck's legacy healthcare products, such as Rebif and Erbitux, may remain under pressure from indirect competition, which creates a significant hurdle for its biopharmaceutical pipeline to offset.

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News

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Trading Information

Previous Close Price
€144.45
Day Range
€141.05–145.05
52-Week Range
€135.00–202.80
Bid/Ask
€0.00 / €0.00
Market Cap
€61.74 Bil
Volume/Avg
523,395 / 348,414

Key Statistics

Price/Earnings (Normalized)
16.57
Price/Sales
2.88
Dividend Yield
1.55%
Dividend Yield (Forward)
1.55%
Total Yield
1.55%

Company Profile

Merck KGaA operates in three main segments: life sciences, performance materials, and healthcare. The life sciences segment (47% of 2022 sales) primarily provides laboratory consumables and services to researchers in academia and applied fields, including the biopharmaceutical industry. In the healthcare segment (35%), Merck develops, manufactures, and sells branded pharmaceuticals with significant therapeutic concentrations in oncology, multiple sclerosis, and fertility. In its electronics segment (18%), 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.
Sector
Healthcare
Industry
Drug Manufacturers - Specialty & Generic
Stock Style Box
Large Core
Total Number of Employees
63,297
Website
https://www.emdgroup.com

Competitors

Valuation

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Metric
MRK
BIIB
DHR
Price/Earnings (Normalized)
 16.5715.1223.39
Price/Book Value
 2.192.393.07
Price/Sales
 2.883.485.45
Price/Cash Flow
 13.1414.8318.64
Price/Earnings
MRK
BIIB
DHR

Financial Strength

Metric
MRK
BIIB
DHR
Quick Ratio
 0.860.901.76
Current Ratio
 1.561.682.26
Interest Coverage
 12.896.6825.14
Quick Ratio
MRK
BIIB
DHR

Profitability

Metric
MRK
BIIB
DHR
Return on Assets (Normalized)
 6.04%9.03%7.50%
Return on Equity (Normalized)
 11.03%16.69%12.81%
Return on Invested Capital (Normalized)
 8.21%10.84%9.02%
Return on Assets
MRK
BIIB
DHR

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