Merck & Co.

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker Analyst Analyst Email
BMO Capital Markets Alex Arfaei alex.arfaei@bmo.com
Berenberg Alistair Campbell alistair.campbell@berenberg.com
Morningstar Damien Conover damien.conover@morningstar.com
Argus Research David Toung dtoung@argusresearch.com
Societe Generale Florent Cespedes florent.cespedes@sgcib.com
Deutsche Bank Research Gregg Gilbert tony.butler@guggenheimpartners.com
Erste Group Hans Engel hans.engel@erstegroup.com
Jefferies Jeffrey Holford jholford@jefferies.com
SunTrust Robinson Humphrey John T. Boris john.t.boris@suntrust.com
Evercore ISI Mark Schoenebaum mark.schoenebaum@evercoreisi.com
Piper Jaffray Richard J. Purkiss richard.j.purkiss@pjc.com
Leerink Partners Seamus Fernandez seamus.fernandez@leerink.com
Cowen & Company Steve Scala steve.scala@cowen.com
Bernstein Research Tim Anderson tim.anderson@bernstein.com
Guggenheim Securities Tony Butler tony.butler@guggenheimpartners.com
Credit Suisse Vamil Divan vamil.divan@credit-suisse.com

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Primary Input Data

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Derived Input Data

Derived Input

Label

2015 Value

2016
Value

Equational Form

Net Operating Profit Less Adjusted Taxes NOPLAT  4,813  6,819 NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)
Free Cash Flow FCF 2,129 1,769 FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS
Tax Shield TS 118 107 TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income
Invested Capital IC 82,576 78,173 IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital
Return on Invested Capital ROIC 5.83%  8.72% ROIC\,=\,\frac { NOPLAT }{ IC }
Net Investment NetInv  9,382  1,038 NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation
Investment Rate IR  194.92% 15.22% IR\,=\,\frac {NetInv}{NOPLAT}
Weighted Average Cost of Capital
WACCMarket 12.97%  10.79% WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)
 WACCBook   7.73%   7.21%
Enterprise value
EVMarket  159,459  171,639 EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash
 EVBook   156,487   171,751
Long-Run Growth
g = IR x ROIC
  11.36%   1.33% Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
g = % \Delta GDP    2.50%   2.50%
Margin from Operations M   19.10%  26.56% M\,\,=\,\,\frac{EBIT}{SALES}
Depreciation/Amortization Rate D   46.26%  34.15% D\,\,=\,\,\frac{D+A}{EBITDA}

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form

Observed Value

Single-stage

multiple g solution

Two-stage valuation

model g solution

12/31/2015 12/31/2016 12/31/2015 12/31/2016 12/31/2015 12/31/2016

EV/SALES 

\frac {EV}{Sales} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)

 4.11  4.35  20.64%  12.52%  17.39%  11.57%

EV/EBITDA

\frac {EV}{EBITDA} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)

11.57 10.77 20.64% 12.52% 17.39% 11.57%

EV/NOPLAT

\frac {EV}{NOPLAT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}

33.13 25.17 20.64% 12.52% 17.39% 11.57%

EV/FCFOPS

\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

74.91 97.03 20.64% 12.52% 17.39% 11.57%

EV/EBIT

\frac {EV}{EBIT} \,= \,\frac{ROIC\,  -\,  g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)

21.53 16.36 20.64% 12.52% 17.39% 11.57%

EV/IC

\frac {EV}{IC} \,= \,\frac{ROIC\,  -\,  g}{WACC\,-\,g}

1.93 2.20 20.64% 12.52% 17.39% 11.57%

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