Is MRK Stock Undervalued At $100?

Core Insights - Merck reported Q3 results with revenues of $16.7 billion and adjusted earnings of $1.57 per share, surpassing consensus estimates of $16.5 billion and $1.50 respectively, primarily driven by Keytruda sales growth [1][2] - The company lowered its full-year earnings outlook due to a one-time charge of $0.24 per share related to deals with Curon Biopharmaceutical and Daiichi Sankyo [1] Financial Performance - Q3 revenue increased by 4% year-over-year, with Keytruda sales rising 17% to $7.4 billion [2] - New drugs Winrevair and Capvaxive are gaining traction, while Gardasil sales fell 11% to $2.3 billion and Januvia and Janumet saw a 42% decline due to competition [2] - Adjusted gross margin expanded by 350 basis points to 80.5% due to a favorable product mix [3] Future Outlook - Merck narrowed its sales outlook to between $63.6 billion and $64.1 billion, with adjusted earnings projected between $7.72 and $7.77 per share [4] - Forecasted sales for full-year 2024 are approximately $63.9 billion, with an expected bottom line of $7.75 [4] Valuation and Stock Performance - Merck's estimated valuation is $130 per share, indicating a 25% upside from the current market price of $102 [5] - The stock is trading at 4.3x trailing revenues, slightly below the 4.5x average P/S ratio over the last five years [5] - Despite a 4% decline in MRK stock this year, it has shown value growth over the past three years, although it has underperformed compared to the S&P 500 [6]