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Merck & Co. Is Flatlined But Watch For Its Revival

Apr. 08, 2021 2:56 PM ETMerck & Co., Inc. (MRK)GWPH, GWPRF, ALKS, GILD, IMV, PAND, IMV:CA62 Comments
Harold Goldmeier profile picture
Harold Goldmeier


  • Merck & Co. is a large legacy company that makes a profit, pays a consistent dividend, and is a familiar and dependable company. That sometimes makes for boring.
  • Analysts have a consensus target price in the mid-$90s while it might be undervalued by over 50%.
  • Merck develops and sells prescription medicines, vaccines, biological therapies, with a special emphasis on women’s health, and animal health products.

Merck & Co. headquarters in Silicon Valley
Photo by Sundry Photography/iStock Editorial via Getty Images

Dependable and Familiar Make for Boring

Profit is fiction for many of the hottest companies. Profit, once the vital factor for investors, is now passé. Merck & Co. (NYSE:MRK) is

This article was written by

Harold Goldmeier profile picture
I write for retail value investors who cannot afford to lose money but sometimes like to take a risk. I speak for free to community and school groups. I was teaching business, social/political activism, and Middle East politics to international university students in Tel Aviv b4 the pandemic hit. A college in Jerusalem hired me to teach business and American Politics beginning in the fall of 2023. I consult with startups and mid-level companies. I co-manage Goldmeier Investments LLC with my son Daniel. I founded the Sappanos Decorating Centers, Chicago, with more than 70 employees and real estate holdings in excess of $15m. I am a former Research and Teaching Fellow at Harvard and Assoc. Prof Tufts Medical School.

Analyst’s Disclosure: I am/we are long MRK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (62)

Carson7 profile picture
Oops. Crushed yesterday. Entered for a trade
SleepyInSeattle profile picture
Long MRK.
@Harold Goldmeier , great article on MRK, and I am now a follower.

MRK is on my watchlist, but I'm nervous about what happens to the dividend when they spin off Organon....
Luca Stein profile picture
@Class M Planet they plan to take on debt on Organon to pay a special dividend before the spinoff most likely for a buyback. An dividend increase plus buyback and therefore lowering the money outflow from dividends should probably help to stabilize the dividend. Also do not forget Organon can pay a dividend too
jillydavid profile picture
Thanks for he analysis. Long and adding at these levels. I found it strange though that you referenced a 2018 article
Added Merck 3 weeks ago at $77.51. Basically we are buying into one of the Mega Cap Pharma at a good price.

The industry revenues and thus share prices have been flat for 20 years.. there was just super exponential growth in revenues from the late 1970's to 2000... so inevitably there was going to be some 'return to the mean' growth trend line.

I believe we are now ready to begin big 7-10% industry growth, for the next leg up over the next 20 years.
Harold Goldmeier profile picture
@rando44 Thank you for the observation. You're right but stock trading from '70s-2000 was a different horsetrade than today. In '21 trades are as much based on glitz and glamour as sound financial information. Industry growth may not translate immediately to Merck shareholders. Nevertheless, there is no full-proof substitute for dependability from a company.
@Harold Goldmeier Ya as a sometimes biotech investors its amazing when I look at the mega cap pharmaceutical companies financials.

-the 'fortress' balance sheet
-disciplined low-risk acquisitions strategy
-measured share buy backs and dividends

-advanced clinical trials expertise
-global regulatory infrastructure
-global sales & distribution network

-broad product portfolio
-vast pipeline of drug candidates
-multiple franchises to build off of

What all this does is building shareholder value, with low risk.
Harold Goldmeier profile picture
@rando44 Excellent perspective. Thank you. Harold
I’m a buyer. Cheers 🥂
frank paxman profile picture
Convincing case for MRK made by the author. Kudos.

I've owned MRK since 1992 (accumulated during '92-'93), reinvesting the dividends ever since. It's helped make me wealthy.
Harold Goldmeier profile picture
@frank paxman Thank you Frank.
CEO should be buying shares aggressively,,,for the company.And personally.
Am I correct 7 out of 10 BOG members are women? That's kinda novel, if I'm right. I do not understand for the world, why MERCK didn't even attempt to develop a Covid vaccine. Shame on them for that. A 100 year world pandemic crisis & the best that they could muster is a tepid willingness to "help" in the production of the PFE vaccine. Why aren't people asking for their heads?
@Devlau2 I think they made the correct call to call off their vaccine (in january), given the circus of dozens of vaccines. (I understand that there are only 3 approved in the US, but there are dozens world-wide)
LittleMilk profile picture
@Devlau2 They're working on an oral (pill) version of the vaccine.
Harold Goldmeier profile picture
@Devlau2 here's info on the newly appointed CEO: www.roi-nj.com/...
Bronxy profile picture
When you look at the max chart for MRK you see a valley from 2000 to the present and that its trading at its 20 year old price. I'm pretty sure it's never even split. I know this because I've owned this slumbering giant for all these years and then some. If it pops I will be more then happy to sell it.
Truebluealpha profile picture
I've been going along boringly buying a few boring shares at a time over many boring months now, and will be happy to continue doing so for a very boringly boring long time to come, awaiting its emergence from slumber...
When your CEO is more interested in politics than your stock price I would say he needs to go.
Winnertakesall profile picture

I vote the board out when I'm not making money or the CEO start playing politics.
Tankrider profile picture
@Winnertakesall I just voted against the Board. We already had an activist Merck CEO for years and don’t need an activist board.
Companies with huge R&D efforts like MRK from time to time come up with a new product out of the blue. While waiting for the next pleasant surprise, you have
shares with a 3.4% dividend yield, and you own an enterprise with a 27% return on equity.
Long MRK
@ahimsaka -Just started a position in MRK today and plan to add more if I can in this price range. Keytruda will continue to make lots of money for MRK and shareholders.
josephaoppenheim profile picture
MRK is at the top of my watch list, but, I prefer PFE, average cost 32.6, and 3% of my stock portfolio.

With upcoming earnings reports, my strategy is to add to more of my stocks if any drop on bad earnings news, or maybe add MRK.
frank paxman profile picture
@josephaoppenheim I own both. SWAN.
Paperone75 profile picture
@frank paxman I will follow you soon!
Ramon_13 profile picture
@jmukamal agreed, total embarrassement
CrazyCatLady profile picture
@jmukamal You do know your cap lock key is on right? It’s hard to take any criticism you have seriously.
LittleMilk profile picture
@jmukamal they're working on an oral (pill) version.
will get rid of Merck in the best possible time...
DivvySam profile picture
@DivvySam because I can use that money more efficiently in investing other stocks..I diversify a lot...I have strict rules..but rather than investing in Merck I can still put that money in a better defensive stock..Merck looks to me (I own it still regretfully) like a super heavy defensive player...I have defensive stocks and I believe I have a balanced portfolio but Merck is really boring:) my intention is not to rubbish the writer....I am just sharing my view...
DivvySam profile picture

Thanks for your thoughts!
Harold Goldmeier profile picture
BREAKING NEWS: Merck’s Keytruda succeeds in late-stage trial as monotherapy in kidney cancer
@Harold Goldmeier Nice job with the article! Well stated.
Initiated a MRK position last year, and am still adding. Hope it stays flattish for a little while longer (he said self-servingly).

Retired dividend-growth investor
Harold Goldmeier profile picture
@usiah I don't think you can go wrong with this strategy. It's ours, too. Most of the shares are in my IRA.
Money&Money,LLC profile picture
MRK is a strong BUY at $75 and under
Investors are probably waiting for the spin off that should take place in a couple of months before buying MRK
DivvySam profile picture
@Edoardo F I have not been following MRK, what spin off are you speaking of?
LittleMilk profile picture
@Edoardo F what spin off?
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