High R&D spending will power their gains

Article Excerpt

We think the drug industry will enjoy great success over the next decade. But due to the nature of the business, results will vary widely and unpredictably from one drug company to another. A volatile market like the one we expect for drug stocks will include winners and losers. Here are two that we expect to be among the big winners. MERCK & CO. INC., $93.77, is a #1 Power Buy for 2022. The drugmaker (New York symbol MRK; TSINetwork Rating: Above Average) (www.merck.com; Shares outstanding: 2.5 billion; Market cap: $236.7 billion; Dividend yield: 2.9%) is a leader in oncology, acute-care and animal-health drugs as well as vaccines. In June 2021, Merck spun off its Women’s Health business, biosimilars (cheaper copies of complex biologic drugs) and its older legacy brands. It then handed out shares of Organon & Co., symbol OGN on New York, to its investors. In the quarter ended March 31, 2022, overall revenue jumped 49.6%, to $15.90 billion from $10.63 billion a year earlier. The…