Merck Stock: Technical Stabilization Emerges After Slump

Darmstadt-based pharmaceutical and technology company Merck is showing initial signs of technical stabilization following an extended period of weakness. Currently trading at approximately €135, the stock has significantly underperformed the broader market, declining over 10% while the DAX index has gained around 16% year-to-date. The share hit a 52-week low of €132.80 on February 12, 2025, considerably below its August 31 peak of €177.00. However, recent quarterly results suggest a potential turning point. Fourth-quarter performance revealed organic revenue growth of 3.8% alongside an impressive 19.7% increase in adjusted EBITDA. For the full year, Merck achieved €21.2 billion in revenue, representing 2% organic growth, while adjusted EBITDA rose 6.9% to €6.1 billion. Despite these positive developments, net profit declined slightly by 1.7% to €2.79 billion. The company plans to maintain its dividend at €2.20 per share, although analysts anticipate an increase to €2.35 for the current year.

Optimistic Outlook for 2025

The company's leadership has expressed confidence regarding Merck's future performance, forecasting profitable growth across all business segments in 2025. Management projects organic revenue growth of 3-6%, targeting between €21.5 and €22.9 billion, with adjusted EBITDA expected to increase organically by 3-8% to €6.1-6.6 billion. Strategic investments in semiconductor materials for AI chip systems appear particularly promising, while the laboratory business has shown clear recovery signals since mid-2024. Additionally, Merck confirmed discussions regarding a potential acquisition of a US cancer specialist, potentially strengthening its pharmaceutical division following setbacks in clinical trials of two promising candidates. Despite current price weakness, analysts remain optimistic, setting an average price target of approximately €183—suggesting potential upside of over 35% from current levels.

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Source StockWorld