Merck & Co. Inc, 2018 Stock Rationale.

At the end of 2017 I published a list of companies that I expect will perform great in 2018. As a follow-up to that list I will publish my findings and due diligence for the individual asset selection. If there are any revisions to the list they will be accessible on the original article. Additionally, at the end of the assessment a comprehensive risk management report will be available. 

Merck & Co. Inc. (NYSE: MRK)

Merck & Co is a pharmaceutical giant when it comes to its cancer therapies and products. At the cornerstone of their sales lies its lung cancer product Keytruda. At the same time the Merck board has been pushing to receive investor support for their vaccine and HIV pipeline in a bid to broaden their sales horizon and diversify their income. The company also spends a significant about of their capital on small cap leveraged buyouts in order to help their R&D department grow.

The sales of Keytruda are growing, and the street’s evaluation for Q3 EPS was beat by 7.7%. Merck & Co is due to release their Q4 earnings report on February 2nd, 2018. The Credit Suisse estimate stands at 1.00 EPS.

Recently a string of successful clinical trials has been able to support the company stock. Additionally, something that stands out is the efficacy of the treatments that Merck is able to deliver, and the improvement on patients’ progression-free survival and overall survival (Link). Keynote-189 also made it clear to investors that Keytruda in combination with traditional chemotherapy and other products can prove invaluable to the pharmaceutical market and potentially double Merck’s $4 Billion sales figure.

Merck is also very bullish when it comes to the pharmaceutical industry. It is a company that not only believes in the progression of modern medicine, but acknowledges the need to provide the healthcare market with superior remedies that will stand apart from the competition. They are not afraid to spend a large amount on research to facilitate a better production pipeline in the future. 2018 marks the continuation of Wave 2 Immuno-Oncology clinical trial program.

Increased Industry Indications by Merck

The company is addressing more immuno-oncological therapy indications through increased clinical trial programs. However they are not the only ones that are targeting NSCLC, their competition is doing the same (Roche, AstroZeneca, BristolMyersSquib).

Merck Co and Competition

 

With the development of Merck’s clinical trial program and increased earnings many companies have set target price for 67$ for the company stock. Assuming the company is able to deliver on it’s Keytruda developments it is to many people belief that Merck & Co share prices may hit 140$ a share by 2020 if they do not lose market share in NSCLC to their competition. For the time being the share price is at an attractive level and the company is set to outperform its evaluation. It is this analysts belief that Merck & Co $MRK is an attractive asset to hold through 2018.

Merck stock price and expected resistance in upcoming earnings.

Leave a Reply