We recently published a list of 12 Best Depressed Stocks to Invest in Now. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against other best depressed stocks to invest in now.
The US stocks ended 2024 with a healthy Q4, as the equity markets were primarily aided by solid economic growth, healthy earnings momentum, and the expectations of the rate cuts. Morningstar highlighted that the results of the US election supported the broader momentum in November. However, in December, the markets were shocked when the US Fed reduced projections for more cuts. Also, the quarter was difficult for bonds as yields continued to jump.
With Trump 2.0 and some positive expectations regarding risky assets, what lies ahead for investors in 2025?
What’s in Store for S&P 500 Index in 2025?
Ameriprise Financial believes that the US economic conditions are likely to remain stable, which can contribute to S&P 500 Index profits growing for 5th consecutive year. The normalized inflation, together with potentially lower interest rates, can support asset prices. The investment firm sees a favorable market backdrop in 2025. Notably, firm economic conditions, near-normal inflation, broadening of profit growth, healthy secular themes throughout technology, and growth-focused fiscal policies are expected to fuel the equity markets momentum, albeit with some volatility throughout the year.
Ameriprise Financial expects that S&P 500 profits will grow by between 10.0% – 15.0% as compared to 2024 levels, courtesy of continued strength in the broader technology space and companies/industries getting support from healthy economic activity and easier YoY comparisons. Furthermore, all 11 S&P 500 sectors are expected to see positive EPS growth in 2025. If sectors like IT and communication services see robust earnings trends in 2025 and other sectors also make a positive contribution, the US stocks are poised to see a strong performance in 2025.
Impact of New Presidential Administration on Markets
Certain potential changes to tax policy, regulation, trade policies, and immigration are expected to influence the equity markets in 2025. Ameriprise Financial further added that a lesser amount of regulation and the extension of expiring provisions in the 2017 Tax Cuts and Jobs Act might be slightly stimulative and positive for asset prices. Vanguard believes that growth momentum is expected to remain solid over the near term thanks to productivity gains and less restrictive monetary policy.
Further, the asset management giant expects the core Personal Consumption Expenditures Price Index, the US Fed’s preferred inflation gauge which excludes volatile food and energy prices, to decline to 2.5% by the 2025 end.
Our Methodology
To list the 12 Best Depressed Stocks to Invest in Now, we used a screener to filter out the stocks that are trading close to their respective 52-week lows. Next, we chose the ones that were popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Merck & Co., Inc. (MRK) the Best Depressed Stock to Invest in Now?
A close-up of a person's hand holding a bottle of pharmaceuticals.
Merck & Co., Inc. (NYSE:MRK) operates as a healthcare company. The company’s stock has been facing pressures as a result of headwinds such as declining sales of the human papillomavirus (HPV) vaccine, Gardasil, and diabetes drug, Januvia. Much of the decline in the stock price came due to the poor performance of the broader drug and biotech sector after Donald Trump chose Robert F. Kennedy Jr., a vaccine skeptic, as the next secretary of the Department of Health and Human Services. Despite the challenges, on January 14, Jefferies analyst Akash Tewari maintained a “Buy” rating on shares of Merck & Co., Inc. (NYSE:MRK), with a price target of $150.
This rating was supported by Merck & Co., Inc. (NYSE:MRK)’s plans to roll out a subcutaneous (under the skin) version of Keytruda earlier than anticipated. To give a brief context, a subcutaneous version of Keytruda refers to the reformulated version of the company’s cancer immunotherapy drug, designed to be administered as an injection under the skin instead of the current intravenous infusion. As per the analyst, the decision to accelerate the program is expected to allow Merck & Co., Inc. (NYSE:MRK) to capture greater market share and garner robust revenue. Furthermore, the analyst remains optimistic about the company’s strategic upgrades to other therapeutics.
The company has a strong position in the oncology market, mainly because of the success of Keytruda. GreensKeeper Asset Management, an investment management company, released its third-quarter investor letter. Hereis what the fund said:
“Merck & Co., Inc. (NYSE:MRK) was our second-largest detractor this quarter, declining -8.3%. MRK’s leading HPV vaccine, GARDASIL 9, faced challenges internationally due to inventory buildup within its Chinese distributor, which is expected to reduce shipments for the remainder of 2024. Despite this short-term impact, the long-term outlook for GARDASIL 9 remains promising. Meanwhile, the company’s $27 billion Keytruda cancer juggernaut continues to grow at a healthy clip, powering earnings growth.”
Overall, MRK ranks 1st on our list of best depressed stocks to invest in now. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
