What If Legacy Pharmaceutical And Consumer Business Keeps Falling For Merck?

27-06-2014 Seeking AlphaComments (0)

Merck & CoPharmaceutical

Merck's (MRK) legacy pharmaceuticals and consumer business constitutes roughly 30% of the company's value according to our estimates. Despite it being a segment that has seen a revenue decline in recent years, its value contribution remains high due to much higher sales compared to other reportable segments. The future of these products appears cloudy at best. Our current price estimate for Merck stands at $55, implying a discount of over 5% to the market price. However, there can be a downside of about 10% to our price estimate if Merck's legacy pharmaceuticals and consumer business revenues continue to decline. To mitigate this risk, Merck is developing some promising drugs to treat cancer and hepatitis C. The market for both these diseases is significant, and currently the industry is witnessing strong R&D efforts from big pharma companies in this area.

What Does Merck's Legacy Pharmaceutical And Consumer Business Include?

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