Today we're going to talk about big pharmaceutical companies--$Merck & Co Inc (MRK.US) $。

Under the influence of the interest rate hike environment and recession expectations, U. S. stocks suffered a series of setbacks, and the S & P 500 index nearly fell into the bear. Investors are flocking to the defensive sector, while the healthcare industry has not fully soared in recent years and valuations remain attractive. Among them, many companies with high dividends and steady growth have performed well, such as Merck & Co Inc, the protagonist of this article, who has risen by more than 23% this year, with share prices rising steadily and hitting record highs this year.

The focus of this article is as follows:

1. What is Merck & Co Inc's brand moat?

2. How is the company's performance?

3. What is the driving force of the rise in stock prices?

4. Is the valuation expensive?

1. Sit on star products such as HPV vaccine

Merck & Co Inc, located in Kenyworth, New Jersey, USA, is one of the pharmaceutical giants in the world, has been leading the research and development of new drugs in the medical field, covering oncology, vaccines, infectious diseases, animal health and other fields. With COVID-19 oral medicine, 4-valent 9-valent cervical cancer vaccine, hepatitis A vaccine, hepatitis B vaccine, PD-1 anticancer drugs and other popular medical products.

In the vaccine field, Merck & Co Inc and GlaxoSmithKline PLC (GSK), Sanofi and Pfizer Inc are ranked as the top four vaccines, occupying an absolute advantage in the global vaccine market share. According to the companies' 2021 results, vaccine sales in US dollars were Pfizer Inc 42.6 billion (including COVID-19 vaccine 36.8 billion), Merck & Co Inc 10.1 billion, GSK9.3 billion and Sanofi 7.5 billion respectively.

When it comes to vaccine subdivision track, Merck & Co Inc's HPV vaccine Gardasil performance is the most eye-catching. Among the world's major vaccine products in 2021, due to strong demand and Merck & Co Inc increased supply, Gardasil grew 44% year on year to reach US $5.673 billion in revenue, surpassing Pfizer Inc's US $5.272 billion in sales of Prevnar series pneumonia vaccines and becoming the highest annual sales revenue of vaccine products.

In addition, Keytruda, Merck & Co Inc's oncology product, is also an important support for the company's sales performance. Keytruda is an anticancer drug that uses a patient's immune system to fight tumors and has been approved in dozens of indications around the world. According to the latest report on May 20th, the European Drug Administration recommended that Keytruda be approved for some melanoma patients, a boon that sent Merck & Co Inc's share price up 1.59% on the day.

Merck & Co Inc stunning market products and this year's most popular COVID-19 small molecule oral medicine. According to the company's quarterly report for 2022, its COVID-19 oral drug Molnupiravi achieved revenue of US $3.2 billion during the reporting period, compared with Merck & Co Inc's expected sales of US $5 billion-5.5 billion in 2022. The first-quarter sales revenue has achieved 64% of the annual forecast, leading the sales of Pfizer Inc's similar drug Paxlovid by 1.5 billion US dollars.

2. Steady growth and high dividend

At a time when economic recession expectations are gradually heating up, Merck & Co Inc's financial data are still sound. The company's Q1 posted revenue of $15.9 billion, up 50% from a year earlier and well ahead of analysts' expectations of $14.7 billion. Excluding the 19% year-on-year increase in oral drug sales by COVID-19, Nonmuri GAAP's net profit was $5.429 billion, up 84% from a year earlier, and earnings per share were $2.14, compared with $1.16 a year earlier.

Based on good market performance, Merck & Co Inc has raised global sales for 2022 to $56.9 billion-$58.1 billion, which is expected to grow by 17%. Adjusted earnings per share for the full fiscal year are expected to be $7.24-$7.36, compared with previous estimates of $7.12-$7.27.

The revenue share of the three major products mentioned above are as follows:

Oncology drug Keytruda: $4.8 billion, up 23% from a year earlier

HPV vaccine Gardasil/Gardasil 9: 1.5 billion US dollars, up 59% from the same period last year

COVID-19 oral drug Molnupiravi: 3.2 billion US dollars, an increase of 19% over the same period last year.

In addition, the company announced at the beginning of the year a quarterly dividend of $0.69 per share (an annualized $2.76). Based on the current share price, the dividend yield is close to 3%, and Goldman Sachs Group has also included it as one of its recommended high dividend stocks.

3. the valuation is attractive, and analysts are generally optimistic.

Wall Street analysts generally give Merck & Co Inc a "moderate buy" rating, with an average target price of $98.2, about 5 per cent higher than the latest closing price.

JPMorgan Chase & Co analysts believe that Merck & Co Inc's core business development momentum is good, Molnupiravir short-term sales upside potential is high, it is expected that 2022 revenue guidance is not unexpected. He lowered his target price for the stock to $95 from $100, but maintained his buy rating.

Based on the 12-month forward price-to-earnings ratio, which assesses the common valuations of large pharmaceutical companies, the industry is currently valued at 14.9 times, while Merck & Co Inc is currently valued at 13 times, according to zacks, a research firm.