Nach einer starken Entwicklung stufen wir die Empfehlung auf KAUFEN herab

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1 MERCK & CO. - KAUFEN Nach einer starken Entwicklung stufen wir die Empfehlung auf KAUFEN herab Dieses Unternehmen ist ausgehend vom Jyske Quant ausgewählt worden. Jyske Quant ist ein Modell, das den Unternehmen Noten auf Basis vieler Faktoren erteilt. Hierdurch berechnet das Modell eine Gesamtnote, die indiziert, inwieweit die Aktie zum aktuellen Zeitpunkt eine gute Anlage ist oder nicht. Dies ist ein nichtkomplexes Produkt. Wir stufen unsere Empfehlung für Merck & Co von STARKER KAUF auf KAUFEN herab. Dies ist vor allem darauf zurückzuführen, dass die Jyske Quant-Punktzahl auf 5,1 gefallen ist gegenüber 6,0 am 8. Januar 2014, als wir die Coverage des Unternehmens aufnahmen. Darüber hinaus sei zu erwähnen, dass sich die Aktie im Zeitraum gut entwickelt hat, und dass wir jetzt schätzen jetzt, dass es für Merck schwieriger wird, eine Outperformance zu verzeichnen. Sector Health Care Fundamental valuation Fair Risk Medium News flow Negative 12-month target price 65.4 Current price 53.5 Reuters MRK.US Bloomberg MRK US JB sec. code KAUFEN gegenüber zuvor STARKER KAUF: Wir stufer hiermit unsere Empfehlung für Merck & Co von STARKER KAUF auf KAUFEN herab. Dies ist vor allem darauf zurückzuführen, dass die Jyske Quant-Punktzahl auf 5,1 gefallen ist gegenüber 6,0 am 8. Januar 2014, als wir die Coverage des Unternehmens aufnahmen. Darüber hinaus sei zu erwähnen, dass sich die Aktie im Zeitraum gut entwickelt hat, und dass wir jetzt schätzen, dass es für Merck schwieriger wird, eine Outperformance zu verzeichnen. Präziser gesagt, hat Merck um 14 % zugelegt, während der breite S&P 500-Index um 1,2 % und der S&P 500 Health Care-Index um 6 % zugelegt haben. Dies ist eine starke Outperformance, die vor allem von guten Daten von MK-3475 sowie von den Meldungen der Geschäftsleitung, dass sie die Zukunft zwei kleinerer Sparten erwäge. Wegen der Outperformance von Merck wird die Aktie gemessen am 2014er KGV, EV/EBITDA und P/B von 0 % bzw. 12 % und 35 % aktuell mit einem Abschlag gehandelt. Price trend 55 Merck & Co. S&P f m a m j j a s o n d j Source: Jyske Bank & Datastream Jyske Markets, Vestergade 8-16 DK-8600 Silkeborg Senioranalyst, Aktienanalyse, Robert Jakobsen jrj@jyskebank.dk Der Investment Case: Merck & Co hat ein breites Portfolio mit einer moderaten Anzahl ablaufender Patente sowie eine starke Pipeline. Mit einer Kombination neuer Produkte, Kosteneinsparungen und Rückkäufe eigener Aktien erwarten wir, dass Merck & Co in den nächsten Jahren ein moderates Wachstum des Gewinns je Aktie erzielen kann. Darüber hinaus schüttet das Unternehmen eine Dividende aus, die über der Assistent, Aktienanalyse, Christoffer Thimsen christoffer.thimsen@jyskebank.dk Wichtige Anlegerinformation: Sehen Sie bitte die letzten Seiten.

2 durchschnittlichen Dividende des Sektors liegt, und gleichzeitig ist die Bilanz relativ gesund. Quant info Quant score 6,1 Share information Number of stocks (mill.) 2921,0 Valuation 4,7 High/Low last 12 months 54/41 Valuation relative 6,5 Price movements 3/12 months 18%/29% Financial strenght 5,9 - relative to index Quality 5,9 Market cap (mill. GBP) 0 Momentum 7,4 Free float 99,1% Performance 5,4 Avr. daily volume (mill.) 636 Der Abschlag im Verhältnis zur Vergleichsgruppe ist niedriger geworden: Peer Gruppe Unternehmen P/E (2014) P/E (2015) EV/EBITDA (2014) EV/EBITDA (2015) P/B (2014) P/B (2015) Merck & Co Inc 16,5 15,2 9,3 8,7 3,4 3,3 Eli Lilly & Co 21,1 18,6 13,2 12,2 4,0 4,0 GlaxoSmithKline PLC 15,2 14,0 10,7 10,1 13,0 12,9 Johnson & Johnson 15,7 14,6 10,1 9,5 3,2 2,8 Pfizer Inc 14,2 13,6 8,8 8,7 2,8 2,7 Roche Holding AG 18,3 16,6 12,0 11,5 9,2 7,5 Novartis AG 15,5 14,8 N/A N/A N/A N/A Sanofi 14,5 13,0 N/A N/A N/A N/A AstraZeneca PLC 16,2 16,4 10,4 10,2 3,9 3,9 Abbott Laboratories 18,1 16,1 10,9 9,9 2,5 2,4 Mittelwert 16,4 15,2 10,4 9,9 5,6 5,2 Aufschlag ggb. gewichtetem Durchschnitt 16,5 15,3 10,7 10,1 5,3 4,9 Aufschlag im Vergl. zum gewichteten Durchsch.. 0% -1% -12% -14% -35% -33% Quelle: Bloomberg. 2

3 Overview Merck & Co. Company profile Merck & Co. is one of the world's largest pharmaceutical companies generating annual sales of almost USD 50bn. The company was established in 1891 as the US subsidiary of the German company Merck KGAA. Merck holds leading positions within several diseases and has, among other things, a market share in the US diabetes market of almost 70%. The company is also a major player in the markets for respiratory medicine and vaccines. Merck & Co. operates in markets across the world and is still striving to strengthen its position in the emerging markets. In addition to pharmaceutical products Merck & Co. delivers medicine to animals, vaccines and general health-care-related products. Sales growth and profitability 80% 70% Sales growth Profit margin 60% 50% 40% 30% 20% 10% 0% -10% E 2014E -20% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% Sales broken down by geographical area Europe, Middle East and Africa 27% Sales broken down by segment Vaccines 10% Animal Health 8% United States 42% Human Health 76% Fundamental valuation Investment case Merck & Co. has a high Jyske Quant score due particularly to Among the global pharmaceutical companies, Merck & Co. the company's attractive valuation, not only in absolute terms but also relative to its closest rivals. In addition, Merck & Co. particularly has a good Quality score, supporting our view of the company as a strong quality company. belongs to the quantile with the strongest pipelines and portfolios. Combined with a diversified position at sector and market level, this makes Merck & Co. a very attractive investment object. The market is currently characterised by a little turbulence, which we consider unnecessary, and we therefore see a significant upside potential. Price triggers Risk factors Increased dividend or share buybacks Generic substitutes enter the market earlier than expected Exciting M&A Disappointments in the pipeline Positive surprises in the pipeline Regulatory challenges Considerable business improvements to the benefit of the Financial disappointments company's growth profile Lawsuits Does not manage to meet the company's development potential 3

4 Disclaimer & Disclosure Jyske Bank is supervised by the Danish Financial Supervisory Authority. The research report is based on information which Jyske Bank finds reliable, but Jyske Bank does not assume any responsibility for the correctness of the material nor any liability for transactions made on the basis of the information or the estimates of the report. The estimates and recommendations of the research report may be changed without notice. The report is for the personal use of Jyske Bank's customers and may not be copied. This report is an investment research report. Conflicts of interest Jyske Bank has prepared procedures to prevent and preclude conflicts of interest thus ensuring that research reports are being prepared in an objective manner. These procedures have been incorporated in the business procedures covering the equity research activities of Jyske Markets, a business unit of Jyske Bank. Moreover, equity analysts at Jyske Bank cannot trade in equities for which they prepare research reports. If an analyst takes over for the responsible analyst in connection with illness, business travels, etc., this analyst cannot trade in the relevant share on the day of publication of the research report and the following day. Jyske Bank may, however, hold positions, have interests in or business relations with the companies that are analysed. The research report has not been presented to the company prior to its release. Analysts receive no payment from persons interested in individual research reports. Read more about Jyske Bank's policy on conflicts of interest at Jyske Bank s share recommendations current allocation Allocation of recommendations, Danish shares (number) Allocation of recommendations, all shares (number) Strong Buy Buy Reduce Sell 0 Strong Buy Buy Reduce Sell Source: Jyske Bank 4

5 Financial models Jyske Bank employs one or more of the following models: Discounted cash flow (free cash flow), Economic Value Added and the dividend model to determine the fundamental value of a company. The fundamental value is compared to a relative valuation based on multiples such as P/E and EV/EBITA. The recommendation and the price target are moreover adjusted for the expected news flow and the market sentiment based on knowledge of the industry and company-specific circumstances. Jyske Bank s recommendations take into account the expected development in the equity market, the various sectors and company-specific circumstances. Risk Investment in this share is associated with a risk. Movements in the equity market, the sector and/or news flows, etc. regarding the company may affect the price of the share. See the front page of the research report for our view of the risk associated with the share. The risk factors stated and/or calculations of sensitivities in the research report are not to be considered all-encompassing. If the share is traded in a currency other than the investor s base currency, the investor accepts an FX risk. In connection with an ADR or similar papers, the FX risk exists relative to the currency in which the underlying share trades. Update of research report The planned update of the report will be prepared immediately upon the release of the company s financial statements. In addition, research reports may be prepared on special themes specifically for the company or research reports where the company is part of the special theme. These research reports are published on an ad-hoc basis. See the front page for the initial date of publication of the report. All prices stated are the latest closing prices before the release of the report, unless otherwise stated. Recommendation Risk-adjusted return Strong Buy >20% Buy 10-20% Reduce 0-10% Sell <0% Source: Jyske Bank Share recommendation concepts Our recommendations are relative to the market development and are based on an evaluation of the forecast return within the coming 12 months. The forecast return is the difference between the current price and our 12-month price target (the price target includes the projected dividend). The equity market has historically yielded a return of around 10% (the US equity market, for instance, yielded a return of 10% during the period ). When we determine the recommendation for a share we use the 10% as an estimate of the return in the equity market. Since our recommendations are relative and risk-adjusted, it is possible to compare our recommendations across sectors and risk categories. In addition, the potential is stated in absolute terms via our price target. It should be borne in mind, however, that the recommendation is the anchor. A BUY recommendation will remain a BUY recommendation until changed, even if price increases have taken the price too close to the price target. The future and historical returns estimated in the research report are stated as returns before costs since returns after costs depend on a number of factors relating to individual customer relations, custodian charges, volume of trade as well as market-, currency- and productspecific factors. It is not certain that the share will yield the stated expected future return/s. The stated expected future returns exclusively express our best assessment. Risk classification definitions: Green products are pro ducts for which the risk of lo sin g the invested am o unt is regarded as insignificant provided th e investm ent is h eld to m atu rity. T h e p rod u ct ty pe is sim p le to gr asp. T his c ateg or y i ncl ud es D an ish go verm en t and m or tgag e bo n ds. Amber products are products for which there is a risk of losing the invested amount partially or fully. The product type is sim ple to grasp. This catego ry includes equ ities traded in regu lated mark ets, mutual fun d units and certificates. Red products are p ro d uc ts for wh ich ther e is a risk of los ing m or e than the i nves ted am ou nt, OR p ro d uct typ es wh ich are difficu lt to g rasp. This category includes structured bonds, hedge funds, options and forward exchange contracts. 5