Merck & Company (MRK) is a global pharmaceutical company headquartered in the United States. The healthcare behemoth develops and produces prescription medicines, animal health products, biologic therapies, and vaccines.
The corporation will reveal its Q122 financial results tomorrow, April 28.
Merck is a leader in the healthcare industry. Merck’s Molnupiravir, an oral antiviral tablet to treat COVID-19, has been in high demand since being granted Emergency Use Authorization by the FDA back in December. Robust demand for the treatment helped the company generate strong fourth-quarter results.
Revenues increased by 24% year-over-year to $13.5 billion in the fourth quarter, while adjusted earnings per share increased by 83.7% to $1.80. Molnupiravir contributed $952 million in the fourth quarter, primarily from the United States, United Kingdom, and Japan.
With a market capitalization of $213.6 billion, the stock has gained around 6% over the past three months. Let’s take a look at how the business is expected to perform in the first quarter.
Q1 Expectations
According to analysts, Merck is expected to report adjusted earnings of $1.83 per share. The Q1 EPS estimates reflect an increase of about 38% in earnings from the year-ago quarter.
Favorable Macro Environment
The macro-environment appears to be quite favorable for pharmaceutical stocks. Given the current geopolitical upheaval and growing inflation, the financial markets are under a lot of pressure. As a result, investors prefer to invest in solid healthcare stocks like Merck.
Barclays analyst Carter Gould agrees with this sentiment and has presented his positive hypotheses on the healthcare sector. He believes that Q1 prints are “unlikely to disrupt the momentum of macro-driven rotation to larger cap biopharma.”
As a result, Gould maintained a Buy rating on Merck stock and increased the price target to $97 from $94 per share. This implies 14.8% upside potential from current levels.
Wall Street’s Take
The Street is cautiously optimistic about Merck, with a Moderate Buy consensus rating based on eight Buys and three Holds. At $92.91, the average MRK price target suggests around 10% upside potential from current levels.
Bottom Line
Merck stock appears to be a good pick for investors, with strong profitability growth potential, a strong drugs pipeline, and significant demand for Molnupiravir.
Discover new investment ideas with data you can trust
Read full Disclaimer & Disclosure
