Merck & Co. (MRK)
Merck & Co. (MRK) is a very serious player in the global pharmaceuticals arena. How serious? Well, their current market cap is over $59 billion. Their 2007 financials indicate total revenue of over $24 billion, and an incredible $4.8 billion on research & development.
Merck’s pharmaceutical segment offers an incredible array of products treating everything from asthma to prostate enlargement. Their vaccines segment also offers a wide range of products including pediatric, adolescent, and adult vaccines aimed at preventing chickenpox, measles, mumps, rubella, and even some cancers.
Of course a common knock on pharmaceutical makers is that profits drop as products come off patent and generic competition is introduced. Merck, like any pharmaceutical maker is susceptible in this respect.
Merck also shares some strong points with other pharmaceutical makers. First is simply that not everything comes off patent at once. Merck is somewhat protected by its broad product line. Another positive factor is that $4.8 billion spent on R&D. Sure, it won’t all pay off–but some of it will. Finally, let’s not forget the baby boom and their almost certain increasing reliance on healthcare spending.
Today Merck closed trading at $28.12, at a PE of about 13.5, and a yield of 5.3%. Does Merck deserve a spot in your portfolio?