Merck KGaA
XETRA:MRK
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Intrinsic Value
The intrinsic value of one MRK stock under the Base Case scenario is 161.42 EUR. Compared to the current market price of 145.8 EUR, Merck KGaA is Undervalued by 10%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Merck KGaA
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Fundamental Analysis
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Merck KGaA, a global science and technology company based in Darmstadt, Germany, has carved out a distinctive niche in the life sciences, healthcare, and high-performance materials sectors. With a rich history tracing back to 1668, it stands as one of the oldest pharmaceutical and chemical companies in the world. Merck KGaA operates in three primary business segments: Healthcare, Life Science, and Performance Materials. The Healthcare division focuses on innovative prescription medicines and therapies, while the Life Science segment provides essential tools and services for research and production in the life sciences. Meanwhile, the Performance Materials branch offers state-of-the-art solut...
Merck KGaA, a global science and technology company based in Darmstadt, Germany, has carved out a distinctive niche in the life sciences, healthcare, and high-performance materials sectors. With a rich history tracing back to 1668, it stands as one of the oldest pharmaceutical and chemical companies in the world. Merck KGaA operates in three primary business segments: Healthcare, Life Science, and Performance Materials. The Healthcare division focuses on innovative prescription medicines and therapies, while the Life Science segment provides essential tools and services for research and production in the life sciences. Meanwhile, the Performance Materials branch offers state-of-the-art solutions for electronic applications and displays. This diverse portfolio positions Merck KGaA as a critical player in industries that are fundamental to advancements in health and technology.
Investors should note that Merck KGaA has made strategic investments in research and development, committing approximately 15% of its annual revenue to this area, underscoring its dedication to innovation and growth. The company boasts a solid financial position, with a revenue forecast expected to rise steadily, driven by a robust pipeline of patented drugs and growing global demand for biopharmaceuticals. With a focus on sustainability and digital transformation, Merck KGaA is not only prepared to thrive in today’s competitive landscape but is also positioning itself for long-term success. By blending a legacy of scientific excellence with contemporary challenges, Merck KGaA represents an intriguing opportunity for investors seeking to navigate the dynamic health and technology markets.
Merck KGaA, Darmstadt, Germany, operates through several core business segments, each focusing on distinct areas within the life sciences, healthcare, and performance materials industries. Here’s a breakdown of its main business segments:
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Healthcare: This segment focuses on prescription medicines, notably in the fields of oncology, immunology, and neurology. Merck KGaA develops innovative therapies to address significant health issues, including multiple sclerosis and various types of cancers.
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Life Science: The Life Science segment provides products and services for laboratories and biopharmaceutical companies. It encompasses a wide range of offerings, including tools for research, as well as materials and technologies for the development and manufacture of pharmaceuticals and biopharmaceuticals.
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Performance Materials: This segment produces specialty materials for various industries, including electronics, display technologies, and coatings. It includes liquid crystals for displays, pigments, and applications in surface treatments, providing critical components to the electronics and automotive sectors.
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Systems Biosciences: Although it's sometimes integrated into the Life Science segment, this area focuses specifically on tools and technologies for scientific research, including molecular biology and cellular analysis.
These segments reflect Merck KGaA's commitment to innovation and its focus on addressing the needs of healthcare systems, scientific research, and technology industries globally. The company emphasizes research and development to drive growth in these markets, aligning with the philosophies of long-term investment and value creation similar to those advocated by Warren Buffett and Charlie Munger.
Merck KGaA, Darmstadt, Germany, operates in various sectors, including pharmaceuticals, life science tools, and performance materials. Several competitive advantages set it apart from its rivals:
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Strong R&D Pipeline: Merck KGaA invests significantly in research and development, leading to a robust pipeline of innovative products. This focus on R&D helps the company stay ahead in competitive markets, particularly in pharmaceuticals and life sciences.
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Diversified Portfolio: The company has a diversified product portfolio across different sectors, which reduces reliance on any single business unit and helps stabilize revenue streams during market fluctuations.
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Global Reach: Merck KGaA has a strong global footprint, enabling it to tap into emerging markets and benefit from international revenues. Its presence in various geographic regions helps mitigate risks associated with localized economic downturns.
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Established Brand Reputation: Over its long history, Merck KGaA has built a strong reputation for quality and reliability. This brand loyalty can be a significant barrier for new entrants trying to compete in its sectors.
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Strategic Acquisitions: The company has a track record of strategic acquisitions that enhance its capabilities and expand its market presence. These acquisitions can also provide access to new technologies and customer bases.
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Focused Business Segments: By concentrating on specific business areas (like specialty pharmaceuticals and life sciences), Merck KGaA can tailor its strategies effectively to address market needs and customer demands.
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Innovation in Life Sciences: In the life sciences sector, Merck KGaA leverages cutting-edge technologies and platforms that provide unique solutions for research and development, keeping it competitive against other life science tool companies.
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Sustainability Initiatives: Merck KGaA is committed to sustainability, which is becoming increasingly important to consumers and investors. Its focus on environmentally-friendly practices can enhance its brand and attract both customers and partners.
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Strong Financial Position: With solid financial health and manageable debt levels, Merck KGaA can invest in growth opportunities, withstand economic downturns, and provide returns to shareholders.
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Key Partnerships: Collaborations with academic institutions, research organizations, and other companies can lead to innovative product development and new business opportunities, strengthening its competitive position.
These advantages contribute to Merck KGaA's ability to compete effectively in the pharmaceutical and life sciences industries, making it a formidable player in the market.
Merck KGaA, a global science and technology company, faces several risks and challenges in the near future. Here’s an overview of some key areas to consider:
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Regulatory Challenges: The healthcare and pharmaceuticals sector is heavily regulated. Changes in regulations, such as those related to drug approval processes, pricing, and patent laws, can significantly impact Merck KGaA's operations and profitability.
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Intellectual Property Risks: Given the biotech and pharmaceutical focus, maintaining patents and protecting intellectual property is crucial. Expiry of patents and potential generic competition can threaten revenue streams, particularly for key drugs.
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Market Competition: The industry is characterized by intense competition from both established companies and new entrants. Merck KGaA must continually innovate to maintain its market position against competitors like Pfizer, Novartis, and other biotech firms.
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Supply Chain Disruptions: Global supply chain issues, exacerbated by geopolitical tensions or pandemics (like COVID-19), can affect the availability and cost of raw materials needed for production. This can lead to delays and increased operational costs.
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Technological Advancements: The rapid pace of technological change in pharmaceuticals and biotechnology, including personalized medicine and digital health, requires ongoing investment in R&D. Failing to keep up with advancements may result in a loss of market share.
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Economic Factors: Fluctuations in the global economy can impact healthcare budgets, patient spending, and overall demand for pharmaceutical products. Economic downturns can lead to reduced healthcare spending by governments and consumers.
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Mergers and Acquisitions Risks: Any strategic acquisitions can pose integration challenges, cultural mismatches, and potential overvaluation risks. Successful post-merger integration is critical to realizing expected synergies.
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Environmental and Social Factors: Increasing focus on sustainability and environmental impacts can pose challenges in terms of compliance and the need for greater transparency. Social factors, including public perception and consumer behavior, can also impact business operations.
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Geopolitical Risks: Political instability, sanctions, and trade disputes can affect market access, particularly in emerging markets where Merck KGaA may be seeking growth opportunities.
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Currency Fluctuations: As a global company, Merck KGaA is exposed to foreign exchange risks. Currency fluctuations can affect profitability, especially when revenues are generated in weaker currencies compared to the Euro.
Mitigating these risks will require strategic planning, continued investment in R&D, vigilant market analysis, and adaptability to changing external conditions.
Revenue & Expenses Breakdown
Merck KGaA
Balance Sheet Decomposition
Merck KGaA
Current Assets | 13B |
Cash & Short-Term Investments | 2.8B |
Receivables | 4.8B |
Other Current Assets | 5.4B |
Non-Current Assets | 36.8B |
Long-Term Investments | 1.1B |
PP&E | 9.4B |
Intangibles | 24.5B |
Other Non-Current Assets | 1.8B |
Current Liabilities | 9.9B |
Accounts Payable | 2.1B |
Accrued Liabilities | 73m |
Other Current Liabilities | 7.7B |
Non-Current Liabilities | 11.4B |
Long-Term Debt | 7.8B |
Other Non-Current Liabilities | 3.6B |
Earnings Waterfall
Merck KGaA
Revenue
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20.9B
EUR
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Cost of Revenue
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-8.7B
EUR
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Gross Profit
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12.2B
EUR
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Operating Expenses
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-8.8B
EUR
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Operating Income
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3.4B
EUR
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Other Expenses
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-739m
EUR
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Net Income
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2.6B
EUR
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Free Cash Flow Analysis
Merck KGaA
EUR | |
Free Cash Flow | EUR |
Merck's second quarter of 2024 showed robust performance, with reported sales growing 2% organically and total sales reaching €5.352 billion, despite a 1% currency headwind. Healthcare led the way with a 5% organic sales increase driven by CM&E and oncology, while Electronics grew 8%, fueled by Semiconductor Solutions. Life Science saw a 4% decline. Despite a minor decline in organic EBITDA pre, Merck improved its full-year 2024 forecast, anticipating net sales between €20.7 billion and €22.1 billion, and EBITDA pre between €5.8 billion and €6.4 billion. The termination of the Xevinapant program was seen as a lowlight but didn't alter capital allocation priorities.
What is Earnings Call?
MRK Profitability Score
Profitability Due Diligence
Merck KGaA's profitability score is 56/100. The higher the profitability score, the more profitable the company is.
Score
Merck KGaA's profitability score is 56/100. The higher the profitability score, the more profitable the company is.
MRK Solvency Score
Solvency Due Diligence
Merck KGaA's solvency score is 60/100. The higher the solvency score, the more solvent the company is.
Score
Merck KGaA's solvency score is 60/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
MRK Price Targets Summary
Merck KGaA
According to Wall Street analysts, the average 1-year price target for MRK is 191.82 EUR with a low forecast of 166.65 EUR and a high forecast of 215.25 EUR.
Dividends
Current shareholder yield for MRK is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
MRK Insider Trading
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Profile
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Description
Merck KGaA is a science and technology company, which engages in the manufacture of pharmaceutical and chemical products. The company is headquartered in Darmstadt, Hessen and currently employs 60,334 full-time employees. The firm operates in three business segments: Healthcare, Life Sciences and Electronics. The Healthcare business, which operates in the United States and Canada as EMD Serono, focuses on such therapeutic areas as allergies, fertility, oncology and neurodegenerative diseases, developing drugs, diagnostic substances and medical devices. The Life Sciences business comprises the activities of MilliporeSigma, which provides solutions that facilitate biotechnology and pharmaceutical research. The product range includes laboratory water systems, gene editing tools, cell lines and end-to-end drug manufacturing systems, among others. The Electronics business enables digital living and provides specialty chemicals for various applications, including liquid crystals for electronic displays, materials for integrated circuits, effect pigments for coatings and color cosmetics, as well as functional materials for energy solutions.
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Employees
Officers
The intrinsic value of one MRK stock under the Base Case scenario is 161.42 EUR.
Compared to the current market price of 145.8 EUR, Merck KGaA is Undervalued by 10%.