Question: Merck is one of the largest pharmaceutical firms in the
Merck is one of the largest pharmaceutical firms in the world, and over an extended period of time in the recent past, it consistently earned higher ROEs than the pharmaceutical industry as a whole. As a pharmaceutical analyst, what factors would you consider to be important in making projections of future ROEs for Merck? In particular, what factors would lead you to expect Merck to continue to be a superior performer in its industry, and what factors would lead you to expect Merck’s future performance to revert to that of the industry as a whole?
Relevant QuestionsJohn Right, an analyst with Stock Pickers Inc., claims: “It is not worth my time to develop detailed forecasts of sales growth, profit margins, et cetera, to make earnings projections. I can be almost as accurate, at ...Joe Fat cat, an investment banker, states: “It is not worth my while to worry about detailed, long-term forecasts. Instead, I use the following approach when forecasting cash flows beyond three years. I assume that sales ...Free cash flows (FCF) used in DCF valuations discussed in the chapter are defined as follows:FCF to debt and equity = Earnings before interest and taxes × (1-tax rate) + Depreciation and deferred taxes-Capital expenditures ...What would be the total equity value (as calculated for scenarios in Table 8-6 using abnormal earnings) if the sales growth in years 2021 and beyond is 8.5percent and the company is able to generate abnormal returns at the ...Intergalactic Software Company went public three months ago. You are a sophisticated investor who devotes time to fundamental analysis as a way of identifying mispriced stocks. Which of the following characteristics would ...
Post your question