In a recent market analysis, two large-cap pharmaceutical stocks, Pfizer and Merck, showed contrasting performances on July 30, ’24. While Merck had a slight slip in Gardasil revenue, leading to a 9.8% drop in its stock, Pfizer reported a strong quarter with a revenue beat and EPS growth.
Merck’s revenue guidance for 2024 and 2025 was revised slightly lower, leading to a decrease in its stock price. However, analysts believe that the stock may still be undervalued, with potential for growth in the coming years.
On the other hand, Pfizer’s strong performance in the quarter has led to positive outlooks from analysts. With expected EPS growth and a high dividend yield, Pfizer is seen as a solid investment option in the current market environment.
Overall, the analysis suggests that Merck may be a good long-term investment, with a stop-loss set at the $109 price level. Meanwhile, Pfizer remains a defensive stock option, with potential for growth and stability in uncertain market conditions. By understanding the performance and outlook of these two pharmaceutical giants, investors can make informed decisions to optimize their portfolios. Merck vs Pfizer: A Deep Dive into Earnings Quality and Potential Upside
In the world of investing, it’s important to look beyond the surface when evaluating stocks. Merck and Pfizer, two pharmaceutical giants, have both seen stagnant stock performance for the past 25 years. However, as Merck has recently shown with new pipeline drugs, things can change quickly in the world of biotech.
One key area of concern for investors is the lack of transparency in cash-flow statements. Both companies should release this information alongside quarterly earnings to give investors a clearer picture of the “quality of earnings.” By comparing net income to cash-flow, investors can better evaluate the true financial health of these companies.
In this blog, we dive deep into the comparison of cash-flow and free-cash-flow per share to actual EPS to gauge earnings quality. It’s worth noting that the SEC’s standards from the 1960s favored EPS over cash-flow per share, a topic for another time.
Looking at the recent earnings reports, Pfizer emerges as the safer bet of the two stocks. However, Merck holds greater upside potential if it can avoid repeating its weaknesses in the next quarter.
Remember, this is just an opinion and not financial advice. Past performance is not indicative of future results, and investing always carries risk. Stay informed and be cautious with your investments.
Thank you for reading and stay tuned for more insights into the world of finance and investments.