Because nothing screams “value” like a company that started by selling morphine and cocaine… and somehow still made it respectable. 😎

🏢 From Pharmacy to Pharma Powerhouse

Merck has come a long way since 1668, when Friedrich Jacob Merck bought a pharmacy in Darmstadt, Germany. Back then, Merck was whipping up morphine and cocaine (yep, you read that right) to treat everything from sinus issues to… well, needing a bit of extra energy. 🥴

Fast-forward 350+ years, and Merck is now a pharmaceutical giant valued at over $250 billion. What started with some questionable "medications" has evolved into one of the world’s leading drug manufacturers, with products spanning human and animal health.

Big Picture:

• Headquartered in New Jersey
• Operates in two segments: Human Pharmaceuticals and Animal Health
• Over 70,000 employees worldwide
• 23 products with over $1 billion in annual sales

And two insiders recently put their money where their mouth is...

💼 Insider Stamp of Approval

When the big dogs are buying, you pay attention. On Feb. 7, 2025, two heavyweight directors scooped up shares of Merck:

✅ Inge Thulin – Former Chairman, President, CEO, and Executive Chairman of 3M

• Bought 2,833 shares @ $88.25 → Total = $250,000

✅ Douglas Baker – Former Chairman & CEO of Ecolab, Board Member at Target Corporation

• Bought 15,000 shares @ $88.50 → Total = $1,327,500

These guys know a thing or two about profit generation. If they’re betting on Merck, maybe it’s worth a closer look. 👀

💊 Merck by the Numbers

Merck's latest earnings report shows steady, if not explosive, growth—but with rock-solid profitability. Let's break it down:

📈 Q4 2024 Performance:

• Worldwide Sales: $15.6B → +7% YoY (9% FX-adjusted)
• GAAP EPS: $1.48
• Non-GAAP EPS: $1.72
• Gross Margins: ~70% (that's impressive)

📆 Full-Year 2024 Performance:

• Worldwide Sales: $64.2B → +7% YoY (10% FX-adjusted)
• GAAP EPS: $6.74
• Non-GAAP EPS: $7.65

🔥 Key Product Highlights:

✅ KEYTRUDA → $29.5B in annual sales (+18% YoY, +22% FX-adjusted)

• The immunotherapy drug treating various cancers = BIG business.
  ✅ WINREVAIR → $419M in sales (used to treat pulmonary arterial hypertension)
  ✅ Animal Health → $5.9B in sales (+4% YoY)
  ✅ GARDASIL → $8.6B (-3% YoY) – HPV vaccine sales dropped a bit

🔮 2025 Financial Outlook

Merck’s guidance is pretty conservative—but consistent:

✅ Sales forecast: $64.1B – $65.6B
✅ Non-GAAP EPS forecast: $8.88 – $9.03
✅ Foreign exchange headwind = ~3% (blame the dollar)
✅ Another 5% dividend increase on the way (hello, passive income!)
✅ $10 billion in share repurchases planned (that’s a whole lot of stock!)

🚀 The Case for Merck as a Value Play

Okay, so it's not exactly a growth rocket—but Merck's value is rock solid:

✅ Steady Cash Flow

• $10B in operating cash flow in 2024
• Reliable, consistent earnings

✅ Strong Margins

• Gross margin ~70%
• Return on Equity (ROE) ~30% (that’s elite)

✅ Reasonable Valuation

• P/E Ratio: 14 → Cheap for big pharma
• Dividend Yield: 3.42% → Safe and rising

🆚 How Merck Stacks Up Against the Competition

Verdict:

• Merck = Cheaper than J&J and Novartis
• Higher yield than Eli Lilly (and less frothy)
• More diversified than Pfizer

😬 But There Are Some Risks…

Let’s keep it real—Merck isn’t without its challenges:

❌ Patent Cliff → Keytruda loses patent protection in 2028 = revenue hit
❌ Foreign Exchange Volatility → A strong dollar could hurt sales
❌ Regulation and Litigation → Big Pharma = big lawsuits + political risk
❌ Sluggish Growth → 7% revenue growth isn’t bad, but it’s not sexy

🌍 A Little Philanthropy Never Hurts

Since its founding in 1957, the Merck Company Foundation has distributed:
✅ Over $740M in total charitable contributions
✅ More than $480M to educational and non-profit organizations

🏆 The Bottom Line

So, should you buy Merck? Let’s weigh the pros and cons:

✅ Steady growth + strong margins → Check
✅ Safe dividend → Check
✅ Cheap valuation → Check
✅ Insider buying → Check
❌ Patent cliff and FX risk → Manageable
❌ Growth outlook? Meh → But hey, that’s value investing!

💡 Final Takeaway:
Merck is the definition of a value stock. Steady, predictable, well-managed—and trading at a reasonable valuation. If you're looking for growth, look elsewhere. But if you're after dependable returns, a solid dividend, and the potential for long-term upside—Merck could be a winner. 😎

🚀 Investment Grade:

Growth Potential: ✅✅
Value: ✅✅✅✅
Diversification: ✅✅✅
Dividend Strength: ✅✅✅✅

Final Thought: Merck isn’t the hottest stock on the market—but sometimes boring makes you rich. 💰