reports
- Julie Utterback
Morningstar | Trimming Narrow-Moat Merck KGaA's Fair Value Estimate on...
After taking a fresh look at Merck KGaA following the Versum acquisition announcement, we are trimming our fair value estimate for the firm and boosting our uncertainty rating. Merck has offered a full valuation for Versum, which has cut into our fair value estimate slightly. Our new high uncertainty rating also recognizes Merck's increasing exposure to the cyclical semiconductor end market and the ongoing risks surrounding Merck's healthcare portfolio and display solutions business. Strategical...
- Julie Utterback
Morningstar | Trimming Narrow-Moat Merck KGaA's Fair Value Estimate on...
After taking a fresh look at Merck KGaA following the Versum acquisition announcement, we are trimming our fair value estimate for the firm and boosting our uncertainty rating. Merck has offered a full valuation for Versum, which has cut into our fair value estimate slightly. Our new high uncertainty rating also recognizes Merck's increasing exposure to the cyclical semiconductor end market and the ongoing risks surrounding Merck's healthcare portfolio and display solutions business. Strategical...
- Michael Waterhouse
- Michael Waterhouse
- Michael Waterhouse
Morningstar | MKKGY Updated Forecasts and Estimates from 27 Mar 2019
Merck KGaA wrapped up 2018 with results mostly in line with our expectations, including $3.8 billion in EBITDA for the year. Management’s outlook for this year of modestly positive revenue growth and high-single-digit EBITDA growth including modest currency headwinds also mostly matches our forecast. We don’t anticipate a material shift to our fair value estimate as we make a few adjustments to our model, but the potential approval of oral multiple sclerosis medication Mavenclad in the U.S. ...
- Michael Waterhouse
Morningstar | Merck KGaA Posts Solid Fourth Quarter with 2019 Outlook ...
Merck KGaA wrapped up 2018 with results mostly in line with our expectations, including $3.8 billion in EBITDA for the year. Management’s outlook for this year of modestly positive revenue growth and high-single-digit EBITDA growth including modest currency headwinds also mostly matches our forecast. We don’t anticipate a material shift to our fair value estimate as we make a few adjustments to our model, but the potential approval of oral multiple sclerosis medication Mavenclad in the U.S. ...
- Michael Waterhouse
Morningstar | Performance in Merck's Life Sciences and Healthcare Divi...
Following the acquisition of life sciences firm Sigma-Aldrich, Merck's life sciences business helps offset the more uncertain futures for its pharmaceutical and performance materials segments. The life sciences segment should maintain stable mid-single digit growth and profitability.We expect little revenue growth in the pharmaceutical segment as Merck battles declines on key products like Rebif and Erbitux combined with a modest contribution from new products like Bavencio and Mavenclad. Rebif ...
- Michael Waterhouse
Morningstar | Life Science and Diagnostics Industry Offers Attractive ...
We think there's plenty to like about the life science and diagnostics industry, including attractive growth opportunities and several competitive advantages that lead to economic moats. The industry tends to have a predictable and attractive growth outlook, especially in areas such as bioprocessing, analytical instrumentation, and genomics, in addition to being somewhat insulated from broader macroeconomic cycles. Nearly every company under our life science and diagnostic manufacturer coverage ...
- Michael Waterhouse
Morningstar | Merck Posts Better-Than-Expected 3Q, but Long-Term Outlo...
While negative currency effects in Latin America weighed on Merck KGaA’s third-quarter results, the company witnessed strong underlying growth, especially in its healthcare and life sciences segments. Consolidated organic growth reached 8.8% while currency, investments in operations, and the pricing pressure in the liquid crystals business led to an EBITDA margin of 25.7%, down about 340 basis points from last year. Management raised its revenue outlook for the year but kept its bottom-line gu...
- Michael Waterhouse
Morningstar | Merck’s 2Q Results on Track as Firm Navigates Currency...
We don’t anticipate a change to our fair value estimate for Merck KGaA following the company’s second-quarter results. As we mostly expected, currency headwinds and ongoing pricing pressure in the liquid crystals portion of the performance materials division led to a 13.7% decline in consolidated adjusted EBITDA. Overall, however, our forecast for EUR 14.3 billion in revenue and $3.85 billion in EBITDA for the year falls near the midpoint of management’s outlook. While we remain concerned ...
- Michael Waterhouse
Political Reality too Much for GOP Healthcare Overhaul; Mixed Impact f...
The political reality of scaling back healthcare coverage for millions of constituents was too much for the U.S. Senate GOP to overcome in passing a major overhaul of the Affordable Care Act. With the loss of more than two “yes†votes for both the initial and revised Senate Republican plan, Senate majority leadership was unable to push a measure that would be appealing to both the moderate and libertarian wings of its caucus. Thus, we believe the probability of a substantive “repeal and re...
- Michael Waterhouse
Senate's Healthcare Bill Shares Great Similarity With the AHCA, but Pa...
While there are challenges to translating the Senate's healthcare bill into law, if successful, we think it would be largely positive for pharmaceutical and devices firms while having a mixed impact on hospitals and managed care firms. After taking great pains to keep their healthcare proposals under wraps to bypass the normal committee consideration process and limit floor debate, Senate Republicans finally revealed their bill on June 22. Despite earlier comments by some senators that their bil...
- Michael Waterhouse
Merck's 1Q Reflects Some Life Science and Performance Materials Weakne...
We don’t expect to change our fair value estimate for Merck KGaA as we make a few adjustments to our model following the firm’s first-quarter results, which benefited partially from a number of royalty- and milestone-related payments in the healthcare segment and a strong currency tailwind. Management’s year-end outlook mostly matches our expectations, although revenue should come in a bit higher than our forecast while profitability lags. We’re leaving our narrow moat rating in place. M...
- Michael Waterhouse
House GOP Takes First Step to Fulfill Promise on ACA
The third time’s the charm as the House of Representatives voted 217 to 213 to pass the revised American Health Care Act. While this provides the House GOP with a way to make good on its long-standing promise to repeal and replace the Affordable Care Act, the altered bill is unlikely to go very far in the Senate for several reasons. First, most of the revisions pushed the legislation rightward in order to gain the agreement of conservatives in the Freedom Caucus. Considering Republicans in t...
- Michael Waterhouse
Fresenius Bulks Up on Complex Generics With Purchase of Akorn and Merc...
We don’t anticipate a material change in our fair value estimate or narrow moat rating for Fresenius as we incorporate the firm’s announced acquisitions of Akorn and biosimilar assets from Merck KGaA. We plan to shift our Akorn fair value estimate to $34 to reflect the deal price. The combination of these assets improves Fresenius' manufacturing capabilities, scale, and access to more limited-competition products in the generics market. Additionally, it improves Fresenius’ product breadth ...
- Michael Waterhouse
Merck KGaA Reports Consistent Results as Healthcare Headwinds Persist ...
Merck KGaA reported fourth-quarter results mostly in line with our expectations, but management’s outlook for potentially flat EBITDA in 2017 falls slightly below our forecast. Regardless, we don’t anticipate a material change to our fair value estimate as we make a few slight adjustments to our model. We’re leaving our narrow moat rating in place. While we anticipate a slight turnaround in the performance materials division in 2017, we anticipate healthcare and life science trends in 201...
- Michael Waterhouse
The Sigma-Aldrich acquisition should help to offset headwinds in Merck...
Following Merck KGaA's third-quarter performance coming in slightly ahead of our expectations, we plan to modestly boost our near-term projections, which may lead to a slight increase in our fair value estimate. Lower-than-anticipated operating costs in the healthcare segment, led by cost controls and R&D costs coming in below budget, resulted in management's increased outlook for the remainder of the year. However, ongoing pressure on Rebif and Erbitux along with the re-emergence of competi...
- Michael Waterhouse
Merck KGaA Posts Solid Third Quarter as Lower Healthcare Costs Lead to...
Following Merck KGaA's third-quarter performance coming in slightly ahead of our expectations, we plan to modestly boost our near-term projections, which may lead to a slight increase in our fair value estimate. Lower-than-anticipated operating costs in the healthcare segment, led by cost controls and R&D costs coming in below budget, resulted in management's increased outlook for the remainder of the year. However, ongoing pressure on Rebif and Erbitux along with the re-emergence of competi...
- Michael Waterhouse
U.S. Elections Add Uncertainty to Healthcare Stocks, but Unlikely to C...
The presidential election of Donald Trump combined with the Republicans retaining majorities in Congress leads to greater uncertainty for healthcare stocks. While Trump and the Republicans have been clear on the desire to repeal the Affordable Care Act (ACA), there is less clarity on their healthcare policies, except for the focus on reducing regulations. We suspect as plans take shape to repeal the ACA, the likely outcome will be more of a modification than a complete repeal as several group...
- Michael Waterhouse
Clinton’s Proposed Drug Plan Doesn’t Change the Pricing Power for ...
We don’t expect any significant fair value estimate changes in the drug group based on Democratic presidential candidate Hillary Clinton’s disclosed drug pricing plan targeting unjustified price increases for older drugs. While passage of the plan in Congress would be very uncertain, if the plan were to take shape, we expect less innovative generic drugs and older branded drugs to be the focus of price controls. Further, we believe the core element of patent protection supporting drug prices...
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