Here’s A Better Pharmaceutical Pick Over Merck Stock

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we think that Bristol Myers Squibb Stock (NYSE:BMY) is currently a better pick than its industry counterparts, merck stock (NYSE:MRK), given its superior growth prospects and comparatively low valuation, with its stock trading at 3.0x trailing revenue, compared to 3.6x for MRK stock. That said, given Merck’s superior profitability, this gap in valuation is also justified. However, given future prospects, we believe that Bristol Myers Squibb will outperform Merck, as we discuss in the sections below. We compare multiple factors such as historical revenue growth, returns and valuation multiples in an interactive dashboard analysis Merck vs Bristol Myers Squibbo, Which stock is the better bet? The excerpts of the analysis are summarized below.

1. Bristol Myers Squibb’s Revenue Growth Is Strong

  • Merck’s sales increased from $39.8 billion in 2016 to $54.1 billion in the past twelve months, while Bristol Myers Squibb’s revenue grew from $19.4 billion in the same period to $45.5 billion, mainly due to the impact of Celgene. it shows.
    CELG
    Acquisitions in 2019
  • However, Merck’s 22% revenue growth over the past twelve-month period was more than 15% growth for Bristol Myers Squibb, following continued growth in sales of Keytruda with its label expansion and a drop in demand for vaccines including Gardasil following a decline. Rebound was given. In 2020, due to the effects of the pandemic.
  • Looking at the slightly longer time frame, both companies have seen an increase in sales. That said, Bristol Myers Squibb’s last three-year revenue CAGR of 29%, aided by the Celgene acquisition, compares with a 6% CAGR for Merck.
  • Looking ahead, with the opening up of economies, the demand for pharmaceuticals is likely to remain high in the near future, augurs well for growth in revenue for both the companies. Our Merck Revenue And Bristol Myers Squibb Revenue The dashboard provides more information on the revenues of the companies.
  • Bristol Myers Squibb’s revenue is expected to grow at a faster pace than that of Merck. The table below summarizes our revenue expectation for MRK and BMY over the next three years, and points to a CAGR of 9.5% for Bristol Myers Squibb compared to a CAGR of 5.1% for Merck.
  • Note that we have different methods for companies negatively impacted by COVID, and for companies that have not been impacted or positively impacted by COVID, while forecasting future revenue. For companies negatively impacted by COVID, we consider the quarterly revenue recovery trajectory to estimate recovery of the pre-Covid revenue run rate, and beyond the recovery point, we consider a return to normal conditions under COVID-19. Let us apply the average annual growth observed over the first three years. For companies reporting positive revenue growth during COVID, we consider average annual growth before Covid, which has a certain weight for growth during COVID and the previous twelve months.

2. Merck is also more profitable and has a better credit position

  • Merck’s operating margin of 18% is significantly better than Bristol Myers Squibb’s 16% over the past twelve-month period.
  • Also, if we look at the recent margin growth, both companies have seen negative growth, with a change in margin for the past twelve months versus the last three years at -2.6% for Merck, compared to a big -23.6% change for Bristol Myers. In. Squibb.
  • Note that Bristol Myers Squibb margin was negatively impacted over the past twelve-month period, as its Myocardia acquisition incurred a one-time in-process R&D charge of $11.4 billion. Bristol Myers Squibb’s operating margin figure for the nine-month period ended September 2021 was 19%, which is still lower than Merck’s approximately 25%.
  • Looking at financial risk, Merck’s 14% debt as a percentage of equity is less than 32% for Bristol Myers Squibb, while the latter’s 14% cash as a percentage of assets exceeds 11% for Merck, whose Meaning MRK has better debt position, but BMY stock has better liquidity position.

3. Net Of It All

  • We see that revenue growth in recent quarters has been stronger for Merck and it is more profitable than Bristol Myers Squibb. That said, BMY’s cash position is better and is trading at a comparatively low valuation.
  • Bristol Myers Squibb recently announced a 10% increase in its quarterly dividend, and it is scaling up its share repurchase program to $15 billion, which is better than previously projected earnings growth in the coming years.
  • Now, looking at the future prospects, using P/S as the basis, due to the high volatility in P/E and P/EBIT, we believe that BMY is the better option. The table below summarizes our revenue and return expectation for MRK and BMY over the next three years, and points to an expected return of 30% for BMY over the period. 24% for MRK, which means both the stocks have good offer potential. Returns further. But if one has to choose between these two, it would be better for investors to buy BMY than MRK, in our view. our dashboard Merck vs Bristol Myers Squibbo There’s more information on how we arrived at these numbers.
  • Note that due to the spread of more contagious virus forms and infections in many geographies, including the US and Europe, COVID-19 is proving to be more difficult than initially thought, compared to a few months ago. Concerns about Omicron have largely rocked the markets. If this large increase in COVID-19 cases from the new version we’re seeing recently is the result of disruption to healthcare, it’s likely to impact sales growth for both Merck and Bristol Myers Squibb.

While MRK and BMY stocks may see higher levels, the COVID-19 crisis has created several pricing discontinuities that could provide lucrative trading opportunities. For example, you’d be surprised how intuitive it is to approach stock valuations. xylem vs merc,

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