An Overview of Merck in the Neuroscience Space



Recent developments

The Merck Foundation announced in August that it would support two programs for the improvement of the health of individuals with Alzheimer’s disease. The Merck Foundation chose the Alzheimer’s Association and the Health Partners Institute for strengthening coordination between Alzheimer’s patients and caregivers.

The Merck Foundation aims to improve Alzheimer’s care by the implementation of best practices, collaboration in the healthcare and social service sectors, and increasing access to Alzheimer’s care.

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Neurology segment’s revenues

Merck’s (MRK) insomnia drug Belsomra generated revenues of $71.0 million in the second quarter, compared to $52.0 million in the second quarter of 2017, reflecting ~37.0% YoY (year-over-year) growth and 31.0% sequential growth. Belsomra reported first-half revenues of $125.0 million, compared to $94.0 million in the first half of 2017.

Financials in a nutshell

Merck (MRK) generated net revenues of $20.5 billion in the first half of this year, compared to $19.4 billion in the first half of 2017. In the first half, the company reported net income and diluted EPS of $2.4 billion and $0.90, respectively, compared to $3.5 billion and $1.27 in the first half of 2017.

Wall Street analysts expect Merck to generate third-quarter revenues of $10.8 billion. Merck expects its non-GAAP net revenues in fiscal 2018 to be $42.0 billion–$42.8 billion and its non-GAAP EPS for the year to be $4.22–$4.30.

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Stock performance

On October 3, Merck (MRK) stock closed at $71.37 for ~35.0% growth from its 52-week low of $52.83 on April 3. Merck hit its 52-week high of $72.42 on October 3.

Merck’s stock price increased from $56.59 on January 2 to $71.37 on October 3, which reflected ~26.0% year-to-date growth.

Analysts’ recommendations

Of the 17 analysts tracking Merck in October, four recommended a “strong buy” while ten analysts recommended a “buy” rating. Three analysts recommended a “hold” rating for Merck in October.

On October 3, Merck had a consensus 12-month target price of $73.93, which is an ~3.58% return on investment over the next 12 months.


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