Here’s Why Merck & Co. (MRK) Traded Lower in Q1

Artisan Partners, an investment management company, released its “Artisan Value Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The growth stock trend that had driven US stocks up since late 2022 collapsed in Q1. The fund’s Investor Class ARTLX, Advisor Class APDLX, and Institutional Class APHLX returned 2.23%, 2.24%, and 2.31%, respectively, in the first quarter compared to a 2.14% return for the Russell 1000® Value Index. The relative performance was positively influenced by its sector allocation, which included lower-than-benchmark weightings in information technology and industrials, as well as a higher allocation in consumer staples. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2025.

In its first-quarter 2025 investor letter, Artisan Value Fund highlighted stocks such as Merck & Co., Inc. (NYSE:MRK). Merck & Co., Inc. (NYSE:MRK) is a healthcare company that operates through Pharmaceutical and Animal Health segments. The one-month return of Merck & Co., Inc. (NYSE:MRK) was -8.15%, and its shares lost 39.14% of their value over the last 52 weeks. On May 29, 2024, Merck & Co., Inc. (NYSE:MRK) stock closed at $76.40 per share with a market capitalization of $191.843 billion.

Artisan Value Fund stated the following regarding Merck & Co., Inc. (NYSE:MRK) in its Q1 2025 investor letter:

“Shares of Merck & Co., Inc. (NYSE:MRK), a health care solutions company, were down 9%. Operating results have been solid, with Q4 earnings beating expectations, but investors were more focused on the continued weak demand in China for Gardasil, a vaccine for human papillomavirus (HPV), and the company’s decision to pause vaccine shipments through at least mid-2025 to pare inventories. Though recent Gardasil setbacks have weighed on sentiment, the overarching issue for shareholders remains the success of Merck’s late-stage pipeline to replace sales that will be lost when blockbuster oncology drug Keytruda (50% of Q4sales) comes off patent in 2028. As shares sell cheaply at just 10X earnings, Merck seems to be getting little credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions, besides return of capital to shareholders via dividends and share repurchases.”

Merck & Co., Inc. (NYSE:MRK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 93 hedge fund portfolios held Merck & Co., Inc. (NYSE:MRK) at the end of the first quarter, which was 91 in the previous quarter. While we acknowledge the potential of Merck & Co., Inc. (NYSE:MRK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Merck & Co., Inc. (NYSE:MRK) and shared the list of stocks everyone’s talking about as Trump blinks in trade war. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.