5 Best Pharmaceutical Stocks to Buy in 2022

2. Merck & Co., Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 80

Merck & Co., Inc. (NYSE:MRK) is an American pharmaceutical company that develops and markets pharmaceuticals, generic drugs, over-the-counter drugs, vaccines, diagnostics, and veterinary medicine. 

On February 3, Merck & Co., Inc. (NYSE:MRK) reported its EPS for the fourth quarter, which came in at $1.80, exceeding estimates by $0.28. Merck & Co., Inc. (NYSE:MRK)’s revenue for the period came in at $13.52 billion, up 8.05% year-on-year, outperforming estimates by $308.78 million. 

On January 25, Merck & Co., Inc. (NYSE:MRK) declared a $0.69 per share quarterly dividend, in line with its previous payout. The latest dividend is payable on April 7 to shareholders of record on March 15. 

JPMorgan analyst Chris Schott lowered the investment bank’s price target on Merck & Co., Inc. (NYSE:MRK) to $95 from $100 on January 28 and kept an ‘Overweight’ rating on the shares ahead of the company’s Q4 results. The analyst does not expect any major surprises in relation to the company’s 2022 guidance based on the positive momentum he’s seeing in Merck & Co., Inc. (NYSE:MRK)’s core business and with near-term upside from molnupiravir sales.

Following the fourth quarter of 2021, 80 hedge funds were bullish on Merck & Co., Inc. (NYSE:MRK), holding stakes worth $3.78 billion. Arrowstreet Capital is a prominent Merck & Co., Inc. (NYSE:MRK) stakeholder, with 8.32 million shares worth $638 million. 

Here is what Miller Howard Investments had to say about Merck & Co., Inc. (NYSE:MRK) in its Q3 2021 investor letter:

“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We hold three pharmaceutical companies, (which includes) Merck (MRK). All three have strong cash flows and balance sheets, making their high dividends reasonably safe. The investment controversy surrounding these pharma companies is whether they can develop or acquire new products to replace their current blockbuster drugs. The low valuations on these stocks reflects what we believe to be undue pessimism by investors on the prospects for new drugs.”