To The Moon

$Merck(MRK)$ is expected to report its quarterly results on 30 July for the period ending 30 June 2024 before the market open.

Merck quarterly revenue is expected to report a rise of 5.4% to $15.841 billion from $15.04 billion the same period last year. Earnings per share is estimated to come in at $2.16.

ROE and Recent Stock Price Performance

There has been some concern over the last three months on Merck’s stock price performance where it declined more than 3%. This has triggered some investors to look at what happened.

Normally to determine if an uptrend or downtrend would continue for the long term, I would focus on looking at ROE, do note that this might not be the best fundamentals to look at how the performance might turn out, at least it gives us somewhere to start.

Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. Simply put, it is used to assess the profitability of a company in relation to its equity capital.

Merck’s ROE (Return On Equity) is below its industry (healthcare) average of 22%, this could be an indication that less than 10% is a poor return on equity which might mean net income could be affected, but do considered the industry Merck is in, healthcare drug, where investment or capital outlays is considered to be large.

So 5.7% might be considered low, what if there have been pretty consistent performance over a longer period.

Merck More Than 15% Year-To-Date Returns On Stock Price

After we have looked at the ROE, no doubt it is on the low side, but if we were to consider longer period of stock price performance, Merck has done quite well with a 16% return on its stock price.

With some of their drug approval on the way, we could be seeing Merck making another significant improvement, so what we need to look out is Merck outlook and guidance for its 2024, and how their industry would be moving.

Merck (MRK) Analyst Price Target Forecast

Based on 16 Wall Street analysts offering 12 month price targets for Merck & Company in the last 3 months. The average price target is $147.00 with a high forecast of $168.00 and a low forecast of $134.00. The average price target represents a 17.36% change from the last price of $125.26.

If we were to consider the current stock price, it is trading below the lowest price target, this could be an indication that Merck could be undervalued, but I wanted to remain cautious when trading health care stock especially drug makers, because there might be some regulatory news or events that could derail the stock price performance.

Technical (MACD and KDJ) - Wait and See For Potential Crossover and Upside

If we looked at the daily chart for MRK, we are seeing that MACD has converge, and now in a decisive path whether are we going to see a bullish crossover. If we were to look at the KDJ for clues and confirmation, we can see that KDJ is showing signs of J value moving upside.

This could be a potential upside before its earnings tomorrow (30 July), but it would depend on how markt perceive this stock in today’s trading.

Summary

Merck can be a long term drug maker stocks, but the recent price correction might make some investors worried, if we looked at it from an opportunity level, this might be a good chance to buy an undervalued stocks.

I would like to focus on Merck net income as well as its drug production plans at least for 2024, this should give us an idea whether Merck could perform and rebound from its recent 3 months decline.

Appreciate if you could share your thoughts in the comment section whether you think Merck could stage a rebound from its 3-month decline of stock price?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.