Merck & Co. (MRK): KEYTRUDA’s Expanding Dominance and New Pipeline Catalysts—Will Trump-Era Policy Shifts Fuel Growth?

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Merck’s Q3 2024 results reaffirm its leadership in the pharmaceutical space, with revenue rising 4% YoY (7% on a constant currency basis) to $16.66B, beating expectations by $143.16M. Oncology continues to drive growth, led by KEYTRUDA (+21% YoY to $7.4B), supported by expanded utilization in earlier-stage cancers. Vaccine growth, particularly GARDASIL, offset challenges in China, while Animal Health (+11% YoY) benefitted from strong demand and the Elanco acquisition integration. Adjusted EPS of $1.57 met expectations, as Merck maintained steady operational execution despite acquisition-related charges. Gross margin expanded 350 bps to 80.5%, reflecting favorable product mix and reduced royalty obligations. Merck’s pipeline remains robust, highlighted by clesrovimab for RSV prevention and CAPVAXIVE, its 21-valent pneumococcal vaccine, which expanded its addressable market significantly. WINREVAIR, with $149M in Q3 sales, is rapidly gaining traction. Challenges in China’s GARDASIL sales persist, but pragmatic guidance and diversification mitigate risks. Potential Trump-era policy shifts, such as scaling back Medicare price negotiation mandates or easing FTC restrictions, could enhance Merck’s pricing flexibility and M&A opportunities, but uncertainty around FDA oversight under Trump and RFK Jr. looms. The key question: Can Merck leverage its oncology dominance, pipeline catalysts, and potential regulatory changes to sustain long-term growth and mitigate risks in key markets like China?

Table of Contents :
• Stock Rating & Target Price
• Investment Thesis
• Fundamental Models Used
• Company Description
• Corporate Timeline
• Key Metrics (KPI ) and Recently Reported Earnings Review
• Business Highlights, Strategic Announcements & Outlook
• Quarter-over-Quarter (Q-o-Q) and Year-over-Year (Y-o-Y) Growth Analysis
• Key Catalysts Driving Growth
• Historical Financial Statement Analysis & CAGR Trends
• Quarterly Key Financial Ratios and Performance Metrics
• Annual Financial Performance Analysis: Horizontal and Vertical Financial Analysis, Trends
• Financial Forecasts
• Annual Forecasts: Income Statement
• Annual Forecasts: Cash Flow Statements
• Net Debt Levels
• A Closer Look at DCF: Our Assumptions and Methodology
• Terminal Value Calculation
• Target Price Analysis
• Valuation Multiples
• Supplementary Valuation Analysis: Multiples Approach
• Scenario/Sensitivity Analysis – Base Case , Bull Case ,Bear Case
• Holistic Peer Review & Trading Comps: Financial Data, Operational Metrics, and Valuation Multiples
• Implied Price Per Share
• Ownership Activity/ Insider Trades
• Ownership Summary
• An analysis of ESG Risk Rating
• Key Professionals
• Key Board Members
• Key Risks Considerations
• Analyst Ratings
• Analyst Industry Views
• Disclosures

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