Analyst Says Merck (MRK) is 'Really Cheap' But Warns About Potential 'Bad News'

Bill Stone, Glenview Trust Company chief investment officer, mentioned his bullish take on Merck (NYSE:MRK) during a recent program on CNBC and explained the potential risks and rewards tied to the stock:

“There's good news and bad news. The good news is they own Keytruda, which has been just a phenomenal success in treating many different types of cancer. The bad news is the patent comes off in 2028, and it will be somewhere approaching maybe 50% of the revenues by that point. So you really have to be a believer that they can restock the cabinet, that they could come up with other versions of Keytruda or versions of it that won't go to generic completely. Stock is really cheap, at like nine times earnings with a nice dividend. So I think you're getting paid to kind of take on that risk.”

Artisan Value Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q1 2025 investor letter:

“Shares of Merck & Co., Inc. (NYSE:MRK), a health care solutions company, were down 9%. Operating results have been solid, with Q4 earnings beating expectations, but investors were more focused on the continued weak demand in China for Gardasil, a vaccine for human papillomavirus (HPV), and the company’s decision to pause vaccine shipments through at least mid-2025 to pare inventories. Though recent Gardasil setbacks have weighed on sentiment, the overarching issue for shareholders remains the success of Merck’s late-stage pipeline to replace sales that will be lost when blockbuster oncology drug Keytruda (50% of Q4sales) comes off patent in 2028. As shares sell cheaply at just 10X earnings, Merck seems to be getting little credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions, besides return of capital to shareholders via dividends and share repurchases.”

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Disclosure: None. This article is originally published at Insider Monkey.