MRK
Merck & Co., Inc.
$122.41
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 1.9% below fair value
You pay
$122.41
Bear
$106.95
Fair
$124.77
Bull
$142.60
Bear
$106.95
-12.6%
$8.22 × 13x P/E
Fair
$124.77
+1.9%
$8.22 × 15x P/E
Bull
$142.60
+16.5%
$8.22 × 17x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
14.9x
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 $129.31 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $124.77 per share.
Warnings
Dividend-based valuation: $95.62 (below our primary estimate by 22%). 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