- Price
- $32.31
- Fair value
- $34.00
- Discount
- 5.0%
- Uncertainty
- Medium
- LSEG rating
- 1.00
- Moat
- Narrow
- Next earnings
- 2026-11-06
- Next earnings is estimate
- Yes
- Company name
- Merck KGaA
- Sector
- Life science, healthcare & electronics
- About
- Merck KGaA is a science and technology company based in Darmstadt, Germany. It is not the same company as the US drug maker Merck & Co. It has three business sectors. Life Science sells tools, chemicals and consumables to research labs and to drug makers that make biologic medicines; its largest unit is Process Solutions. Healthcare sells medicines for cancer, multiple sclerosis, fertility and thyroid and heart conditions, such as Erbitux, Bavencio, Mavenclad and Rebif, and it bought SpringWorks Therapeutics in July 2025. Electronics sells materials and delivery systems for semiconductor and display production. Net sales were € 10.6 billion in the first half of 2026. The family of the founders holds most of the company through E. Merck KG. MKKGY is an American Depositary Receipt that trades over the counter in the US.
- Thesis
- The market prices Merck KGaA for the fall of its Healthcare business and the cost of its largest planned purchase. Mavenclad, a large multiple sclerosis medicine, faces generic competition in the US: its sales fell 10.2% organically in Q2 2026, and the 2026 guidance assumes no US Mavenclad sales from August 2026. Healthcare sales fell 3.4% organically in Q2 2026. In June 2026, Merck agreed to buy Bio-Techne for $73 per share in cash, an enterprise value of about $11.3 billion, and it expects the deal to add to EPS pre only from the third year after closing. The company will fund it with new bonds, cash and a loan, so net financial debt will rise from € 9.2 billion. For the gap to close, three things must be true. Life Science and Electronics must keep growing, as in Q2 2026, when Process Solutions grew 14.7% and Semiconductor Solutions 17.3% organically, so that they offset the Healthcare decline. Merck must reach its 2026 guidance of € 5.9 billion to € 6.3 billion of EBITDA pre and EPS pre of € 7.90 to € 8.60. The Bio-Techne deal must close in late 2026 or early 2027, as expected, while Merck keeps a strong investment grade rating. The Q3 2026 report, estimated for about November 6, 2026, gives the next test. The deal closing and the 2027 guidance in March 2027 are the main tests. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is a faster fall in Healthcare sales than the growth in Life Science.
- Risks
- Mavenclad faces generic competition in the US, and Merck expects no US Mavenclad sales from August 2026. Bavencio also faces more competition. If new medicines do not grow fast enough, Healthcare sales and profit keep falling.
The Bio-Techne purchase, with an enterprise value of about $11.3 billion, needs approvals and adds debt. Merck expects it to add to EPS pre only from the third year after closing. Delays, integration problems or weaker demand for life science tools can reduce its value.
Life Science and Electronics depend on spending by drug makers, research labs and chip makers. A slowdown in biotech funding or in semiconductor production can slow growth.
Merck reports in euros but earns much of its sales in US dollars and Asian currencies. A stronger euro reduces reported results, and the guidance assumes negative currency effects of up to 2% for 2026.
- Balance sheet
- Cash: €3.1B
Debt: €12.3B
Net debt: €9.2B
Merck funds itself with bonds, commercial paper, hybrid bonds and bank loans. At June 30, 2026, financial debt was € 12.30 billion, with € 8.68 billion of bonds and commercial paper, € 2.66 billion of bank loans and € 630 million of lease liabilities. Cash and cash equivalents were € 1.96 billion, and other current financial assets were € 1.14 billion. Net financial debt was € 9.21 billion, up from € 8.62 billion at December 31, 2025. Merck repaid a € 500 million euro bond in the first half of 2026 and it announced the early repayment of a € 271 million hybrid bond on September 9, 2026. To pay for Bio-Techne, it plans new bonds, cash and a loan, and it has hedged part of the interest rate on the planned bonds and the US dollar purchase price. Merck aims to keep a strong investment grade rating. Operating cash flow was € 1.42 billion in the first half of 2026, and the company expects free cash flow of about € 1.8 billion to € 2.3 billion for 2026.
As of 2026-06-30.
- Checkpoints
- Nov 6, 2026 (estimate): Q3 2026 results: Healthcare decline and Life Science growth. Pending. Watch: Organic growth in Life Science and Electronics that offsets the Healthcare decline, and a confirmed 2026 guidance, pass; a cut to the guidance fails.
Q1 2027 (estimate): Bio-Techne purchase closes. Pending. Watch: The purchase closes in late 2026 or early 2027 with no large change in terms and a strong investment grade rating passes; a delay or a rating downgrade fails.
- Recent events
- 2026-08-06: Merck reported Q2 2026 results. Net sales rose 3.4% to € 5.43 billion, with organic growth of 4.1%. EBITDA pre rose 9.4% to € 1.60 billion, a margin of 29.4%. EPS pre rose to € 2.16, while reported EPS fell to € 1.13 because of a hedge effect linked to the Bio-Techne purchase and higher administration costs. Life Science grew 8.0% and Electronics 11.7% organically, and Healthcare fell 3.4%. Merck raised its 2026 guidance to net sales of € 21.0 billion to € 21.8 billion and EBITDA pre of € 5.9 billion to € 6.3 billion.
2026-07-01: Merck announced that it will repay early, on September 9, 2026, the full € 271 million outstanding of a hybrid bond issued in 2020.
2026-06-25: Merck agreed to buy Bio-Techne, a US maker of life science tools, analytical technologies and consumables, for $73 per share in cash, an enterprise value of about $11.3 billion (€ 9.9 billion). The deal needs antitrust approvals and the approval of Bio-Techne shareholders, and Merck expects it to close in late 2026 or early 2027. It expects the deal to raise the EBITDA pre margin at once and to add to EPS pre from the third year after closing.
2026-06-18: Merck completed the purchase of Saturnus Bio, a private US biotechnology company that develops gene modulation treatments for rare inherited heart muscle diseases.
2026-05-01: Kai Beckmann became Chair of the Executive Board, after Belén Garijo's term ended in April 2026. Benjamin Hein succeeded him as CEO Electronics.