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Rahway, New Jersey-based Merck & Co., Inc. (MRK) operates as a healthcare company worldwide. Valued at $256.4 billion by market cap, the company delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and MRK definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the general drug manufacturers industry. Merck is a leader in research and development, with a strong focus on discovering and developing new drugs and vaccines. Through collaborations with academic institutions, biotech firms, and other pharmaceutical companies, Merck maintains a robust pipeline in multiple therapeutic areas. With products like Keytruda and Gardasil, Merck has established itself as a global leader.
Despite its notable strength, MRK slipped 23.1% from its 52-week high of $134.63, achieved on Jun. 25. Shares of MRK dipped 12.7% over the past three months, underperforming the Invesco Pharmaceuticals ETF’s (PJP) marginal losses during the same time frame.
In the longer term, shares of MRK declined 5% on a YTD basis and fell 2.5% over the past 52 weeks, considerably underperforming PJP’s YTD gains of 13.8% and 20.5% returns over the last year.
To confirm the bearish trend, MRK has traded below its 200-day moving average since late July. The stock has been trading below its 50-day moving average since late June, with slight fluctuations.
Merck has faced challenges in the market due to the upcoming loss of exclusivity for its leading drug, Keytruda, as well as increased competition in the oncology sector. The recent price reductions for Januvia and a one-time charge related to acquisitions have also contributed to the company's underperformance.
On Oct. 31, MRK shares closed down more than 2% after reporting its Q3 results. Its adjusted EPS of $1.57 surpassed Wall Street expectations of $1.50. The company’s revenue was $16.7 billion, topping Wall Street forecasts of $16.6 billion. Merck expects full-year adjusted EPS to be between $7.72 and $7.77, and expects revenue in the range of $63.6 billion to $64.1 billion.
In the competitive arena of general drug manufacturers, Eli Lilly and Company (LLY) has taken the lead over MRK, showing resilience with a 41.6% uptick on a YTD basis and solid 40.4% gains over the past 52 weeks.
Wall Street analysts are bullish on MRK’s prospects. The stock has a consensus “Strong Buy” rating from the 26 analysts covering it, and the mean price target of $133.09 suggests a potential upside of 28.5% from current price levels.
