Merck & Co., Inc.

MRK Details

Merck & Co., Inc. (NYSE: MRK) is a pharmaceutical firm that develops drugs, vaccines, biologics, and animal health products. It develops therapeutics to treat various ailments, such as cardiometabolic disease, cancer, and infections. The company also has a sizable vaccine business, providing treatments for hepatitis B, pediatric illnesses, HPV, and shingles, among others.

Latest News:

• KEYTRUDA Phase 3 Data Release: MRK announced findings from the Phase 3 KEYNOTE-522 trials on February 09, 2022. In patients with high-risk early-stage triple-negative breast cancer (TNBC), neoadjuvant KEYTRUDA, MRK's anti-PD-1 therapy, in combination with chemotherapy followed by adjuvant KEYTRUDA as monotherapy (the KEYTRUDA regimen) significantly prolonged event-free survival (EFS) compared to neoadjuvant chemotherapy followed by adjuvant placebo (the chemotherapy-placebo regimen).

FY21 Results:

• Growth in Topline: The company reported a 17.31% increase in sales to USD 48.70 billion in FY21 (ended December 31, 2021) compared to USD 41.52 billion in FY20.
• Boost in Net Income: The company's reported an increase in net income (attributable to its shareholders) to USD 13.05 billion in FY21 from USD 7.07 billion in FY20.
• Surge in GAAP EPS: MRK reported a sharp uptick in GAAP EPS to USD 4.86 in FY21 from USD 1.78 in FY20.

Key Risks:

• Product Concentration Risk: The company makes most of its money from a few primary products: Keytruda, Gardasil/Gardasil 9, Januvia/Janumet, and Bridion. Any drop in sales or pricing for these products could harm the company's operating and financial results.
• Competition Risk: MRK is up against new goods and low-cost generics from competitors in the healthcare market. As a result, the company's financials could be harmed by competitors developing superior products or inadequate patent protection laws in the nations where it competes.

Outlook:

• FY22 Estimates: As of February 03 2022, MRK anticipates its FY22 global sales to be between USD 56.1 and 57.6 billion. It further expects FY22 GAAP EPS to be between USD 5.76 and 5.91.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

MRK' share price has remained stable throughout the year; however, it gained 8.37% in the past twelve months. It is currently leaning towards the mid-band of its 52-week range of USD 68.38 to USD 91.40. We have valued the stock using the Price/Earnings multiple-based relative valuation methodology and arrived at a target price of USD 86.14. Considering the company's proven track record, market dominance in the pharmaceutical industry, current valuation, and above-mentioned risks, we recommend a "Hold" rating on the stock at the current price of USD 77.22, up 0.86% as of February 11, 2022, at 1:35 PM ET.

Three-Year Technical Price Chart (as of February 11, 2022; at 1:35 PM ET). Source: REFINITIV, Analysis by Kalkine Group

 * The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

Barrick Gold Corporation

GOLD Details

Barrick Gold Corporation (NYSE: GOLD) is a gold mining corporation based in Canada, primarily involved in the production and sale of gold and copper and other related activities such as exploration and mine development. GOLD has mining operations in Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, the United States, and Zambia.

Latest News:

• Preliminary Production Update: On January 19, 2022, GOLD announced its preliminary Q4FY21 and FY21 production results meeting its annual guidance targets for the third year in a row. Preliminary gold output for FY21 was 4.44 million ounces, falling within the 4.4 to 4.7 million ounce guidance range, with the Africa & Middle East and Latin America & Asia Pacific areas closing the year at the higher end of their respective regional gold guidance ranges. Copper production for 2021 is expected to be 415 million pounds, within the guidance range of 410 to 460 million pounds. The preliminary Q4 results show 1.23 million ounces of gold and 113 million pounds of copper in sales, as well as 1.20 million ounces of gold and 126 million pounds of copper in output. In Q4, gold's average market price was USD 1,795 per ounce, while copper's average market price was USD 4.40 per pound.

Q3FY21 Results:

• Decline in Topline: The company reported a YoY decrease of 20.17% in revenue to USD 2.83 billion in Q3FY21 (ended September 30, 2021) from USD 3.54 billion in Q3FY20, owing to a reduction in Realized gold price.
• Reduction in Bottomline: Net income for Q3FY21 decreased 51.85% YoY and stood at USD 612 million compared to USD 1.27 billion in Q3FY20.
• Cash and Debt Position: As of September 30, 2021, the company had cash & cash equivalents of USD 5.04 billion and total debt of USD 5.15 billion.

Key Risk:

• Metal Price Risk: The company is exposed to volatility in the gold and silver prices; any adverse move in the underlying commodity prices could weigh the company's overall financial performance.

Outlook:

Gold Production Outlook (Source: Results Presentation, November 04, 2021) 

Valuation Methodology: Price/Cash Flow Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

GOLD's share price has declined 14.75% in the past nine months and is currently leaning towards the lower-band of the 52-week range of USD 17.27 to USD 25.37. Underlying commodity (Gold) is hovering in a long-term bullish zone, with the gold contract hovering above its crucial long-term and short-term support levels of 200-day and 50-day SMAs, implying a bullish trend. We have valued the stock using the Price/Cash Flow-based relative valuation methodology and arrived at a target price of USD 22.24.

Given the firm underlying commodity price like gold, copper and silver, we believe Gold miner's with great fundamentals are getting even better; ignored gold stocks are due for a strong move higher as traders rediscover their massive upside potential. Higher gold prices will catalyze that, which are coming in this super-bullish environment. Hence, We recommend a "Hold" rating on the stock at the current price of USD 20.1266, up 4.28% as of February 11, 2022, 12:51 PM ET.

Three-Year Technical Price Chart (as of February 11, 2022, at 12:51 PM ET). Source: REFINITIV, Analysis by Kalkine Group

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.