Opinions
Dr. Richard Evans
Merck & Company
MRK-N
COMMENT
Jan 25, 2017
Stock price when the opinion was issued
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Off highs. 2025 provides a broad opportunity in healthcare. Big cancer drug Keytruda coming off patent in 2028, but that's built into the stock price trading at 10x PE. Other drugs in the pipeline to fill in the space. Track record of successful and profitable blockbusters. Yield is 3%.
(Analysts’ price target is $126.88)It is best in class. It is a large manufacturer of vaccines but the primary driver is an immune therapy drug that is used across many types of cancers and has 200 ongoing trials. It is coming off patent later in the decade. The vaccine take-up could lead to slower growth but this is a shorter term issue. Buy 24 Hold 8 Sell 0
(Analysts’ price target is $124.60)Certainly some stocks are less vulnerable to issues involving tariffs. What comes to mind are healthcare companies. You could look at some of the beaten-down companies that really didn't do well last year, as they're doing quite well today. Try this name, which he owns.
Whole healthcare complex was weak in 2023 and 2024, so the valuations were reasonable coming into 2025. Current market downtrend plus today's threat of tariffs on pharmaceuticals, and we don't know how this will all end. Drug pipeline is particularly exciting.
Can't tell you when it will turn the corner, but it's a good component of a diversified portfolio.
They’ve had great success in their drug for lung cancer. Lung cancer is about a 5th of the demand for immuno ecology agents, but the balance of the market is 4X larger and consists of many indications. If you look at who is in the lead, it is more often Bristol-Myers (BMY-N) than this company. Merck had incorrectly been left behind on valuation, but that has now been lifted. Capital markets are looking at who wins and who loses in immunology as an absolute, but that is not the case, it is going to be a balance between the 2. This is a fine company and the valuation is reasonable, but he would rather be with Bristol-Myers. (See Top Picks.)