• Home
  • Blog
    • Resources
    • Business Partner Magazine Archive
  • About Us
    • Cookie Policy
    • Disclosure Policy
    • Privacy Policy
    • Terms of Website Use
  • Contacts

Business Partner Magazine

Tips and advice for entrepreneurs, start-ups and SMEs

  • Business Success
  • Marketing
  • Finance
  • Employees
  • Technology
  • Start-up
  • Productivity
  • Communication

Merck Me Up When The Market Falls

November 2, 2022 by BPM Team

Click here to get this post in PDF

Too long to read? Enter your email to download this post as a PDF. We will also send you our best business tips every 2 weeks in our newsletter. You can unsubscribe anytime.

Enter your NameEnter your Email Address
business people working with stock trading forex with technical indicator tool on laptop
Image source: Shutterstock.com

Merck is one of the biggest pharmaceutical companies in the world and one of the leaders in the Dow Jones Industrial index. In fact, Merck stock has had such a good year that it’s outperformed the Dow Jones by about 30% over the year so far. Moreover, it looks like the growth will keep coming, in stark comparison to the overall bearish sentiment around DJI.

How is that possible, you may ask? Well, the Dow Jones can be seen as a snapshot of what’s going on with major US companies – so when the world goes through a long-term economic crisis and most companies fall to shambles (sound familiar?), the Dow reflects that.

Let’s take a look at how the Dow Jones Index has performed over the last three years, starting back in 2020 when Covid-19 made its entrance, causing a dramatic drop in the immediate before giving way to a gradual bull market that lasted all the way until February 2022.

Dow Jones Index

The pandemic boom, which saw many brands rake in the cash by embracing an online business model, is now well and truly over after the events of 2022. The military conflict in Ukraine quickly led to an all-encompassing energy crisis, accompanied by surging consumer prices and accelerating global inflation. Central banks around the world began hiking rates to tame inflation, with the hawkish Federal Reserve aggressively hiking interest rates in the US, with each hike aggravating the stock market.

Dow Jones Index

Merck stock is listed on the DJI, but when looking at the chart it almost seems like the company is completely unaware of the global slump. The pharmaceutical giant has seen +13% over the last 12 months, or +17% if we count the dividend yield.

Dow Jones Index

Merck made its name developing and producing medicines, vaccines, biological therapies and animal health products, and is now one of the biggest blue chip stocks in the US – a company is often considered blue chip when it has a strong brand name and presence, as well as financially sound fundamentals and consistently strong earnings. 

Besides, Merck belongs to the dividend aristocrats of the market. These are public companies that have not only paid but raised dividends every year for decades, and not only does Merck fit into this class but its dividend yield is 2.96% when the average dividend from companies listed on the Dow is 2.01%.

The pharmaceutical giant has an important growth engine called Keytruda, which is a medicine used in cancer immunotherapy to treat certain types of the disease. In addition to its primary role as a cure for cancer, this segment also provides a lucrative business for the company itself – for the first half of 2022, Keytruda made up about one-third of all company sales, representing more than $10 billion. 

However, for Merck, more than just Keytruda holds potential. Cancer treatment is one of the company’s main priorities and a promising direction for future development, which, of course, comes with pros and cons. On the one hand, this focus is almost guaranteed to bring in promising returns (if the treatment’s success continues); on the other hand, such odds could result in Merck not being sufficiently diversified. 

Perhaps one of the reasons the diversification factor doesn’t seem to bother investors is that it’s not actually an issue right now. Merck specializes in a ton of fields and works in a variety of areas, ranging from biological therapies to the production of animal health products. On top of that, Merck has a patent on Keytruda until 2028, so there are still years of sales in their future.

One more factor leading to bullishness around this stock is its price-earnings ratio, which is sitting at about 16 right now, meaning there is still growth potential here –sentiment analysts agree with, on the whole. In addition, MRK’s average price target is around 7% higher than its current share price, which may not seem like a huge upside, but given the overall economic crises and when you consider how many stocks have negative price targets, you can see why Merck stands out. 

Meanwhile, analysts still believe the overall market is overvalued and could continue to see losses, meaning the gap between the Dow Jones and Merck may only widen. That being said, analysts don’t always know everything, so make sure to do your own research before making a trade.

You may also like: What Entry-level Investors Must Know About the Stock Market

Filed Under: Featured Posts, Finance Tagged With: Featured Article, finance, stock market

  • Facebook
  • Instagram
  • Pinterest
  • Twitter
  • YouTube

Disclosure

We earn commissions if you shop through the links on this page.

Recent Posts

  • The Weird World of Online Furniture Shopping
  • 3 Tips For A Beginner Freelance Manual Tester
  • A Beginner’s Guide to Investment Planning in Bothell
  • Maximizing Your IT Budget – Tips and Tricks for Small Business Owners
  • 6 Top Tips About Business Disputes

Categories

Archives

Digital Marketing Agency

ReachMore Banner

Tags

Accounting apps bitcoin brand business growth business skills business success communication cryptocurrency Customer Service Data design ecommerce Efficiency employees Featured Article finance finances Health and Safety infographic insurance Investing investment legal legal services legal tips Management Marketing marketing strategy Outsourcing productivity property Real estate sales security SEO Social Media software starting a business startup Technology Trading Training website workplace

Disclosure

We earn commissions if you shop through the links on this page.

Digital Marketing Agency

ReachMore Banner

Business Partner Magazine

Business Partner Magazine provides business tips for small business owners (SME). We are your business partner helping you on your road to business success.

Have a look around the site to discover a wealth of business-focused content.

Here’s to your business success!

Copyright © 2023 - Business Partner Magazine·