Merck(US:MRK) InvestorPlaceยท2024-05-10 10:01Sector Rotation - Sector rotation involves moving funds between sectors based on macroeconomic factors, with healthcare stocks being a prime example during the pandemic [1] - As pandemic concerns eased, funds shifted to sectors like retail, travel, and tourism, while technology became the hottest sector [1] - The healthcare sector remains evergreen due to the increasing global disease burden, suggesting potential for strong returns from undervalued stocks [1] Pfizer (PFE) - Pfizer stock is trading at 10-year lows with a dividend yield of 6%, reflecting market concerns over lower growth post-pandemic and revenue impacts from drugs going off-patent [2] - Despite these concerns, Pfizer appears undervalued with a forward price-earnings ratio of 12.1 and has a pipeline of 113 candidates, expecting at least $20 billion in incremental revenue from new molecular entities by 2030 [2] - Pfizer anticipates $25 billion in incremental revenue from new business deals by 2030 and has recently acquired Seagen to enhance its oncology business [3] Merck (MRK) - Merck stock has increased by 9.5% over the past 12 months and trades at a forward price-earnings ratio of 15, with a dividend yield of 2.36% [5] - Analyst estimates show 83% have a buy rating, with a potential upside of 20% to $155, indicating possible total returns of 30% to 35% in the next 12 to 18 months [5] - For Q1 2024, Merck reported sales growth of 9% year-on-year to $15.8 billion and has a sales growth guidance of 5% to 7% for the full year [5][6] Teladoc Health (TDOC) - Teladoc stock has significantly declined from $300 in February 2021 to $12.2, primarily due to weak growth in a post-pandemic environment [7] - For Q1 2024, Teladoc reported revenue growth of 3% to $646.1 million and a 20% increase in EBITDA to $63.1 million [7] - The company has guided for full-year revenue of $2.7 billion and adjusted EBITDA of $370 million, with optimism for steady growth in international revenues over the next five years [7]