Best Dow Jones Stocks to Buy: Merck & Co., Inc. (MRK)
Merck & Co., Inc. (NYSE:MRK) is one of two largest drug companies, along with Pfizer Inc. (NYSE:PFE) that are included in the Dow Jones. Merck shares are up 8% in 2017 and continue to sport an impressive dividend yield of 3%. Drug companies continue to see pressure on pricing and patent expiration of major blockbusters. MRK caught my eye with a new blockbuster drug that is just starting to hit home run potential.
Merck’s Keytruda is a humanized antibody in the new class of immunotherapy drugs targeting cancer cells. The drug has been approved for several treatments, but is also in more than 160 trials worldwide and continues to see its sales potential increasing for analysts.
Keytruda is targeting areas like melanoma, lung cancer, head cancer, and neck cancer. Keytruda is seen as a top 20 drug by the year 2020 with an estimate of $4.5 billion. Rival cancer drug Opdivo from Bristol-Myers Squibb Co (NYSE:BMY) is listed as the potential number three overall drug in 2020 with sales of $8 billion. If trials continue to go as planned, Keytruda could continue to shrink the gap as the drug is winning faster approvals and potential better treatment options.
In 2015, MRK received an amazing unpaid celebrity endorsement for Keytruda. Former President Jimmy Carter took Keytruda to fight his metastasized melanoma. After radiation and Keytruda, Carter was cancer free, an amazing testimony to Merck’s drug and its potential.
In fiscal 2016, Keytruda had sales of $1.4 billion, an increase of 148%. Fourth-quarter sales of Keytruda increased 125% to $43 million. The drug was Merck’s fourth best-selling in 2016 and has already risen. In the first quarter of fiscal 2017, Keytruda trailed only Januvia ($1.3 billion) with $584 million in revenue, an increase of 134%. It seems the early guesses that this drug would be worth $4.5 billion by 2020 might have been on the conservative side. Keytruda could be worth more than $2 billion in annual sales already in 2017, a nice pull for MRK.
Merck raised its full year guidance slightly in the first quarter, a positive sign even before the additional approval for Keytruda. The company sees full year revenue in a range of $39.1 to $40.3 billion. Earnings-per-share are seen hitting a range of $3.76 to $3.88. Both of these ranges come in slightly down to slightly above the last fiscal year. There’s more to MRK than Keytruda, but this drug is definitely a reason to make it one of the best Dow Jones stocks to buy.