Michael Hakes - CFA, MBAMerck & CompanyMRKHOLDApr 14, 2023

He owns ELI and AZN instead. MRK's key drug, Keytruda, is an anti-cancer treatment which drove their sales up 21% last year, and amounts to nearly 30% for their sales, but the patent cliff will happen in 2028. So, MRK must replace those sales (drug pipeline or buy a company). Be cautious here.

Portfolio of cancer-fighting stars. Great portfolio and great pipeline. Low valuation of 12x earnings. AAA balance sheet, good future. Good times ahead. Yield is 3%.

A cheap stock. Their Keytruda drug did very well, perhaps the best-selling drug of all time.

Upgraded today and he agrees. His #1 healthcare pick this year. A key drug will come off patent in 2028, but they have tons of drugs to replace it. They beat and bottom lines.

Healthcare is having a poor year, but they have a tremendous drug pipeline and strong balance sheet.

Had great success during the pandemic; their vaccine led. The company just offered growth warnings. He prefers Merck for its better valuation and their key drug Keytruda which makes up 35% of their revenue.

Benefitted from Covid vaccines. Patent expirations in a couple of years. How will they continue to grow? Company is confident in acquisitions and internal R&D. She's looking at it, no decision yet. Cheap multiple, attractive yield. More of a deep value play.

MRK's done relatively better. Drugs going off patent also, but pipeline is a bit better. She's looking at this one too, still assessing.

She's overweight the healthcare sector as a whole, to withstand both volatility and a potential recession. Diverse portfolio. Earnings have climbed for years. Gained over 20% in August alone, so could be start of an uptrend. Better-than-expected earnings and sales. Increased guidance. Yield is 2.65%.

His homework shows that MRK is an excellent opportunity on pipeline, future growth, earnings, and cashflow. 

Can do the heavy lifting in your portfolio.

Excellent company with strong R & D capability.
Trading at good price for long term investors.
AAA balance sheet.
Strong dividend yield with excellent coverage (retained earnings more than 50%).

They're holding an investor event on Monday. They bought a company to bulk up their autoimmune pipeline, but he expects the meeting to focus on their oncology drug, the best in the business.

Once consumer division gets spun out, JNJ will look more like MRK as a pure pharma play. He owns MRK, and it's performed defensively well, with a strong portfolio. JNJ is more diversified, but MRK is a better company.

Still owns share in company
Very strong pandemic performance. 
Excellent margins in healthcare business.
Very bright outlook for business.
Demand for healthcare products not slowing down.
Expecting new pharma products in the R&D pipeline. 
Lots of outstanding patents that protects business model.