MRK
Merck & Co., Inc.
$127.50
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 0.5% above fair value
You pay
$127.50
Bear
$108.75
Fair
$126.87
Bull
$145.00
Bear
$108.75
-14.7%
$8.22 × 13x P/E
Fair
$126.87
-0.5%
$8.22 × 15x P/E
Bull
$145.00
+13.7%
$8.22 × 17x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
15.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $136.33 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $126.87 per share.
Warnings
Dividend-based valuation: $95.16 (below our primary estimate by 23%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples