The major market indexes, ever the paragons of self-congratulation, now bask in the glow of all-time highs. It is not surprising, therefore, that many stocks trade at valuations so inflated they might as well be priced in speculative futures. Yet, amid this gilded delirium, three stocks remain stubbornly cheap, their virtues obscured by the clamor of the crowd.
Three contributors to CORP-DEPO, ever the mavericks, have identified these neglected gems: Merck (MRK), Novo Nordisk (NVO), and Pfizer (PFE). Their rationale, though tinged with the optimism of the desperate, warrants scrutiny.
Merck: A Company of Unlikely Resilience
David Jagielski (Merck): Merck, a pharmaceutical colossus with a market cap exceeding $200 billion, presents a curious case. Its flagship cancer drug, Keytruda, will lose patent protection in 2028, a date that looms like a specter over its earnings. Yet, investors, ever the optimists, have been preoccupied with this impending loss, neglecting the company’s more immediate endeavors.
Merck, in its wisdom, has launched a new injectable form of Keytruda, a gesture as much symbolic as practical. It has also acquired Verona Pharma for $10 billion, a transaction that, if successful, might yet resurrect its fortunes. The recently approved Winrevair, a treatment for pulmonary arterial hypertension, is hailed as a potential blockbuster-a term that, in the world of pharmaceuticals, is as reliable as a fortune cookie.
The stock, having fallen over 15% this year, now trades at a forward P/E of less than 9, a figure that would make even the most jaded investor pause. For long-term holders, it is a bargain, though one that hinges on the company’s ability to navigate the treacherous waters of innovation and regulation.
The healthcare sector, ever the playground of the overconfident, has largely dismissed Merck’s prospects. Yet, in the shadow of its patent expiry, the company continues to expand, its ambitions as vast as its balance sheet. One might say it is a study in contrasts: a giant clinging to the hope of becoming greater.
Novo Nordisk: The Sell-Off’s Excesses
Prosper Junior Bakiny (Novo Nordisk): Novo Nordisk, that paragon of pharmaceutical prowess, has faced a tempest of challenges over the past 18 months. Its financials, though robust, have fallen short of market expectations, and clinical setbacks have left its stock in a state of melancholy. The sell-off, though justified in part, has veered into the realm of the absurd.
Currently trading at 13.6 times forward earnings, Novo Nordisk is cheaper than the average healthcare stock, a fact that should not be overlooked. The company’s revenue and earnings growth, though brisk, have not been rewarded with the same enthusiasm as its peers. This, however, is the nature of markets: they reward the confident and punish the cautious.
Its recent approvals for Wegovy, particularly for MASH, are promising, though the market’s skepticism remains. The drug’s potential to generate over $1 billion in annual sales is a testament to the unmet needs of patients, though one wonders if the company’s ambitions are as grand as its projections.
With Rybelsus’s European approval and the pending U.S. review of oral semaglutide, Novo Nordisk’s future appears bright. Yet, the market’s tendency to overreact ensures that its current valuation is a gift to the patient investor. One might say it is a case of the market’s own folly.
Pfizer: A Tale of Waning Glory
Keith Speights (Pfizer): Pfizer, once the titan of the pharmaceutical world, now faces the inevitable decline of its blockbuster drugs. The loss of patent exclusivity for Inlyta, Xeljanz, and others is a harbinger of change, though the company’s sales for these products will not vanish overnight.
At 7.7 times forward earnings, Pfizer’s stock appears undervalued, a fact that should not be ignored. Yet, the company’s reliance on its legacy products is a reminder of the impermanence of success. Its pipeline, however, offers a glimmer of hope: Padcev, Elrexfio, and Abrysvo are among the many candidates that could drive future growth.
The dividend yield of 7.12%, a figure that would make even the most frugal investor smile, further enhances the stock’s appeal. Yet, one must question whether this yield is sustainable, or merely a temporary reprieve from the company’s broader challenges.
Pfizer’s story is one of resilience, though its future remains uncertain. In the world of investing, where the past is often a poor guide to the future, the company’s fortunes are as unpredictable as the tides.
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2025-09-22 17:04