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5 Reasons Why Merck (MRK) is a Good Stock to Buy Now
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Kenilworth, NJ based Merck & Co., Inc. (MRK - Free Report) is a research-driven pharmaceutical company, which is a global leader in the discovery and development of vaccines and pharmaceutical drugs. The company currently makes noteworthy treatments or vaccines for HPV, type 2 diabetes, cancer, and HIV, among others. It looks like a great stock to buy now. Here are some reasons for the same.
Merck’s earnings estimates for 2017 as well as 2018 went up by 0.3% in the past 7 days following its strong earnings and raised outlook. In fact, Merck’s earnings performance has been pretty impressive, with the company exceeding earnings expectations consistently. The average positive earnings surprise over the last four quarters is 4.36%.
Share price of the company has risen 16.6% in the past one year while the Zacks classified Large-Cap Pharma industry registered an increase of 4.5%.
Strong Q1 Results: Merck beat estimates for both earnings and sales in the first quarter of 2017 and also raised its 2017 guidance.
Merck’s Pharmaceutical segment revenues rose 1% year over year as strong performance of new products like Keytruda, Bridion and Zepatier and higher sales of vaccines and animal health franchises offset lower sales of the Januvia/Janumet franchise and loss of market exclusivity for many drugs.
Successful New Products: Merck’s new products like Keytruda and Zepatier should continue to contribute meaningfully to the top line.
In the first quarter of 2017, Keytruda sales rose 20.9% sequentially and 134.5% year over year while Zepatier sales rose 65% sequentially.
Keytruda is the first anti-PD-1 therapy to gain FDA approval. Keytruda sales received a boost with the approval in the first-line lung cancer setting. In fact, Keytruda is continuously growing and expanding into new indications and markets globally. In Mar/Apr 2017, Keytruda received FDA and EU approval for refractory classical Hodgkin lymphoma (cHL) - the first Keytruda approval for hematologic malignancy indication. In May, Merck got a boost with the FDA granting accelerated approval to Keytruda for use in combination with Eli Lilly & Company’s (LLY - Free Report) cancer drug Alimta (pemetrexed) and carboplatin (pem/carbo), a commonly used chemo regimen, for the first-line treatment of metastatic non squamous non-small cell lung cancer (NSCLC), irrespective of PD-L1 expression. Note that this is the first FDA approval for Keytruda as combination therapy.
Keytruda uptake in first-line lung cancer indication and potential label expansion - with FDA action pending on multiple regulatory applications - are catalysts for the stock in 2017.
Deep Pipeline: Merck has also made significant progress with its pipeline and is working on bringing new products to the market.
Merck has more than 10 candidates in phase III development. The company has prioritized its pipeline so that the candidates with the highest potential get the required support. Some of the important pipeline candidates include MK-0859 (anacetrapib - cholesterol management), verubecestat (prodromal Alzheimer’s disease), MK-8228/letermovir (cytomegalovirus (CVM) infections) and MK-8835/ertugliflozin (type II diabetes – in partnership with Pfizer, Inc. (PFE - Free Report) .Meanwhile, Keytruda is being studied for more than 30 types of cancer.
Merck, in order to build its long-term portfolio, is tapping external sources as well. The company entered into several licensing deals in the last couple of years with expectation of more such deals in the future.
Aggressive Cost Cutting Initiatives: Merck will continue to focus on cost-cutting initiatives to drive the bottom line. Merck has a global restructuring program in progress, which is aimed at reducing the cost structure and increasing efficiency. It intends to reduce the number of manufacturing sites, including animal health sites, and consolidate other facilities. The company expects annual savings of about $4.0−$4.6 billion once the restructuring program is completed.
Merck also divested segments like the Consumer Care business to Germany’s Bayer AG (BAYRY - Free Report) in 2014 so that it can focus on its core areas of expertise. The company is also returning value to shareholders in the form of share buybacks and dividends.
Conclusion
Merck has its share of headwinds. Like many of its peers, Merck is facing headwinds in the form of generic competition for several key products. Pricing pressure and rising competition in the immuno-oncology market is also a significant concern
However, we believe the new drug approvals, a solid pipeline and aggressive savings will pave the way for growth this year.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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5 Reasons Why Merck (MRK) is a Good Stock to Buy Now
Kenilworth, NJ based Merck & Co., Inc. (MRK - Free Report) is a research-driven pharmaceutical company, which is a global leader in the discovery and development of vaccines and pharmaceutical drugs. The company currently makes noteworthy treatments or vaccines for HPV, type 2 diabetes, cancer, and HIV, among others. It looks like a great stock to buy now. Here are some reasons for the same.
Favorable Rank, Rising Estimates & Share Price: Merck carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merck’s earnings estimates for 2017 as well as 2018 went up by 0.3% in the past 7 days following its strong earnings and raised outlook. In fact, Merck’s earnings performance has been pretty impressive, with the company exceeding earnings expectations consistently. The average positive earnings surprise over the last four quarters is 4.36%.
Share price of the company has risen 16.6% in the past one year while the Zacks classified Large-Cap Pharma industry registered an increase of 4.5%.
Strong Q1 Results: Merck beat estimates for both earnings and sales in the first quarter of 2017 and also raised its 2017 guidance.
Merck’s Pharmaceutical segment revenues rose 1% year over year as strong performance of new products like Keytruda, Bridion and Zepatier and higher sales of vaccines and animal health franchises offset lower sales of the Januvia/Janumet franchise and loss of market exclusivity for many drugs.
Successful New Products: Merck’s new products like Keytruda and Zepatier should continue to contribute meaningfully to the top line.
In the first quarter of 2017, Keytruda sales rose 20.9% sequentially and 134.5% year over year while Zepatier sales rose 65% sequentially.
Keytruda is the first anti-PD-1 therapy to gain FDA approval. Keytruda sales received a boost with the approval in the first-line lung cancer setting. In fact, Keytruda is continuously growing and expanding into new indications and markets globally. In Mar/Apr 2017, Keytruda received FDA and EU approval for refractory classical Hodgkin lymphoma (cHL) - the first Keytruda approval for hematologic malignancy indication. In May, Merck got a boost with the FDA granting accelerated approval to Keytruda for use in combination with Eli Lilly & Company’s (LLY - Free Report) cancer drug Alimta (pemetrexed) and carboplatin (pem/carbo), a commonly used chemo regimen, for the first-line treatment of metastatic non squamous non-small cell lung cancer (NSCLC), irrespective of PD-L1 expression. Note that this is the first FDA approval for Keytruda as combination therapy.
Keytruda uptake in first-line lung cancer indication and potential label expansion - with FDA action pending on multiple regulatory applications - are catalysts for the stock in 2017.
Deep Pipeline: Merck has also made significant progress with its pipeline and is working on bringing new products to the market.
Merck has more than 10 candidates in phase III development. The company has prioritized its pipeline so that the candidates with the highest potential get the required support. Some of the important pipeline candidates include MK-0859 (anacetrapib - cholesterol management), verubecestat (prodromal Alzheimer’s disease), MK-8228/letermovir (cytomegalovirus (CVM) infections) and MK-8835/ertugliflozin (type II diabetes – in partnership with Pfizer, Inc. (PFE - Free Report) .Meanwhile, Keytruda is being studied for more than 30 types of cancer.
Merck, in order to build its long-term portfolio, is tapping external sources as well. The company entered into several licensing deals in the last couple of years with expectation of more such deals in the future.
Aggressive Cost Cutting Initiatives: Merck will continue to focus on cost-cutting initiatives to drive the bottom line. Merck has a global restructuring program in progress, which is aimed at reducing the cost structure and increasing efficiency. It intends to reduce the number of manufacturing sites, including animal health sites, and consolidate other facilities. The company expects annual savings of about $4.0−$4.6 billion once the restructuring program is completed.
Merck also divested segments like the Consumer Care business to Germany’s Bayer AG (BAYRY - Free Report) in 2014 so that it can focus on its core areas of expertise. The company is also returning value to shareholders in the form of share buybacks and dividends.
Conclusion
Merck has its share of headwinds. Like many of its peers, Merck is facing headwinds in the form of generic competition for several key products. Pricing pressure and rising competition in the immuno-oncology market is also a significant concern
However, we believe the new drug approvals, a solid pipeline and aggressive savings will pave the way for growth this year.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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