STOCKREPORTS+

MERCK & CO INC (MRK-N)

Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

Last Close Avg Daily Vol 52-Week High Trailing PE Annual Div ROE LTG Forecast 1-Mo Return
79.22 (USD) 13.0M 79.58 60.5 2.20 9.5% 9.5% 9.6%
2018 December 03 Market Cap 52-Week Low Forward PE Dividend Yield Annual Rev Inst Own 3-Mo Return
NEW YORK Exchange
206.3B 52.83 17.3 2.8% 41.7B 78.1% 15.5%

AVERAGE SCORE
POSITIVE OUTLOOK: MRK's current score of 8 Score Averages
places it among the top quartile of stocks scored. Pharmaceuticals Group: 4.5 Mega Market Cap: 7.2
Pharma. & Med. Research Sector: 4.0 S&P 500 Index: 6.8

Average Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive PFE 8 8 9 9 9
AMGN 6 7 4 6 8
Neutral MRK 7 6 7 8 8
JNJ 6 5 7 6 7
Negative
ABT 6 6 5 6 5
2015-12 2016-12 2017-12 2018-12

HIGHLIGHTS THOMSON REUTERS I/B/E/S MEAN

- The score for Merck & Co Inc has been on a positive trend from
6 to 8 over the past 23 weeks. Buy Mean recommendation from all analysts covering
17 Analysts the company on a standardized 5-point scale.
- The recent change in the Average Score was primarily due to
an improvement in the Fundamental component score.
Strong
Sell Reduce Hold Buy
Buy

PRICE AND VOLUME CHARTS

1-Year Return: 41.8% 5-Year Return: 59.2%

BUSINESS SUMMARY
Merck & Co., Inc. is a global healthcare company. The Company offers health solutions through its prescription medicines, vaccines, biologic therapies
and animal health products. It operates through four segments: Pharmaceutical, Animal Health, Healthcare Services and Alliances. The Company's
Pharmaceutical segment includes human health pharmaceutical and vaccine products marketed either directly by the Company or through joint
ventures. Human health pharmaceutical products consist of therapeutic and preventive agents, generally sold by prescription, for the treatment of
human disorders. The Company sells its human health pharmaceutical products primarily to drug wholesalers and retailers, hospitals, government
agencies and managed healthcare providers, such as health maintenance organizations, pharmacy benefit managers and other institutions. Vaccine
products consist of preventive pediatric, adolescent and adult vaccines, primarily administered at physician offices.

Page 1 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

INDICATOR COMPONENTS
The AVERAGE SCORE combines the quantitative analysis of six widely-used investment decision making tools: Earnings,
Fundamental, Relative Valuation, Risk, Price Momentum and Insider Trading. A simple average of the underlying component ratings is
normally distributed to rank stocks on a 1-10 scale (10 being awarded to the most favorable). These factors may be evaluated differently
using alternative methodologies and the importance of individual factors varies across industries, market capitalization and investment
styles. Additional criteria should always be used to evaluate a stock.

Earnings Fundamental Relative Valuation Risk Price Momentum Insider Trading

OPTIMIZED SCORE
Historically, companies with an optimized score
of 3 have tended to moderately underperform
the market over the following 12-month period.
PEER ANALYSIS
As an alternative approach to equally weighting each of the six factors, independent
research firm, Verus Analytics, conducted a backtest to empirically determine the
optimal factor blend. Results and weighting vary across four different market
capitalization categories. For large cap stocks, price momentum and insider trading
historically provided the most explanatory power among the six factors and are
weighted heavily in the current optimized score. Among the small cap universe, the
earnings and fundamental factors joined with insider trading and price momentum to
explain returns.
Currency in USD

PRICE MOMENTUM VALUATION FUNDAMENTAL ANALYSTS

Average Price 1-Mo 3-Mo 1-Yr Market Trailing Forward Dividend Net LTG I/B/E/S # of
Score Ticker (2018-12-03) Return Return Return Cap PE PE Yield Margin Forecast Mean Analysts
7 JNJ 146.21 3.9% 8.6% 4.5% 394.0B 292.4 17.1 2.5% 1.9% 7.8% Buy 19
9 PFE 45.99 7.1% 10.8% 26.5% 268.1B 11.6 15.0 3.0% 44.6% 7.4% Hold 18
8 MRK 79.22 9.6% 15.5% 41.8% 206.3B 60.5 17.3 2.8% 8.0% 9.5% Buy 17
8 AMGN 202.93 8.5% 1.6% 14.5% 132.7B 54.8 14.4 2.6% 9.4% 4.7% Buy 24
5 ABT 74.27 5.8% 11.1% 32.7% 130.1B 154.7 23.9 1.5% 2.9% 11.5% Buy 21
6 LLY 118.52 11.0% 12.2% 38.9% 125.7B 263.3 21.1 1.9% 1.9% 12.5% Buy 18
7 BMY 53.28 5.1% -12.0% -15.7% 87.3B 60.6 13.1 3.0% 6.5% 11.0% Hold 19
10 AGN 158.09 -3.0% -17.5% -7.0% 52.8B 23.5 9.8 1.8% 14.5% 6.0% Buy 23
9 CELG 73.42 -1.0% -22.3% -28.1% 50.5B 18.7 7.4 -- 19.6% 19.8% Buy 27
5 MYL 34.10 7.6% -12.9% -10.5% 17.5B 32.8 6.8 -- 4.7% 7.3% Buy 17
4 PRGO 63.45 -11.2% -17.1% -27.1% 8.5B 73.8 14.0 1.2% 2.5% 5.0% Hold 15
7.1 Average 95.41 3.9% -2.0% 6.4% 133.9B 95.2 14.5 2.2% 10.6% 9.3% Buy 19.8

PEER COMPANIES
JNJ Johnson & Johnson BMY Bristol-Myers Squibb Co
PFE Pfizer Inc AGN Allergan
AMGN Amgen Inc CELG Celgene Corp
ABT Abbott Laboratories MYL Mylan
LLY Eli Lilly and Co PRGO Perrigo Co

Page 2 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

EARNINGS Currency in USD

POSITIVE OUTLOOK: Strong earnings with Earnings Score Averages

recent analyst upgrades or a history of Pharmaceuticals Group: 5.4 Mega Market Cap: 7.3
surpassing consensus estimates. Pharma. & Med. Research Sector: 5.4 S&P 500 Index: 6.7

Earnings Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive MRK 10 10 10 10 10
AMGN 4 8 6 7 9
Neutral JNJ 10 8 10 9 9
ABT 10 10 7 9 8
Negative
PFE 6 6 4 4 6
2015-12 2016-12 2017-12 2018-12

EARNINGS INDICATORS
Earnings Surprises Estimate Revisions Recommendation Changes
(33.3% weight) (33.3% weight) (33.3% weight)

JNJ
MRK
ABT
PFE

AMGN
ABT
AMGN MRK ABT
PFE
JNJ

PFE

AMGN
JNJ
MRK

Last 4 Quarters Last 4 Weeks Last 120 Days

# Positive Surprises (> 2%) 4 # Up Revisions 0 # Broker Upgrades 0
# Negative Surprises (< -2%) 0 # Down Revisions 0 # Broker Downgrades 0
# In-Line Surprises (within 2%) 0 Avg Up Revisions 0.0%
Avg Surprise 4.3% Avg Down Revisions 0.0%

HIGHLIGHTS PRICE TARGET

- Merck & Co Inc currently has an Earnings Rating of 10, which is The chart indicates where analysts predict the stock price will be within
significantly more bullish than the Pharmaceuticals industry average of the next 12 months, as compared to the current price.
5.4.
98.00 12-Month Price Target
- Over the past 90 days, the consensus price target for MRK has HIGH
Mean (USD) 79.10
increased notably from 71.60 to 79.10, a gain of 10.5%. 91.00
High 95.00
84.00 79.22
- Over the past 4 quarters, the company has reported 4 positive, 0 MEAN
Low 63.00
negative, and 0 in-line surprises. The average surprise for this time 77.00 Target vs. Current -0.2%
period has been 4.3%. Most recently on 2018-10-25, the company
70.00 # of Analysts 17
reported quarterly earnings of 1.19 per share, a positive surprise of
4.4% above the consensus of 1.14. 63.00 LOW
Current Price Price Target
(USD)

Page 3 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

EARNINGS PER SHARE

Actuals Estimates
1.400

Earnings per share (EPS) is calculated 1.300 Quarterly 18-12 19-03

by dividing a company's earnings by the 1.190
Mean 1.049 1.110
number of shares outstanding. Analysts 1.200
HIGH
tend to interpret a pattern of increasing High 1.080 1.160
1.100 1.050 1.060 MEAN
earnings as a sign of strength and flat LOW Low 1.000 1.060
or falling earnings as a sign of 0.980
1.000 # of Analysts 11 4
weakness.
0.900
The charts provide a comparison 17-12 18-03 18-06 18-09 18-12 19-03
between a company's actual and
estimated EPS, including the high and Actuals Estimates
low forecasts. 5.100

4.800 HIGH Annual 2018 2019

MEAN
LOW
Mean 4.340 4.708
4.500
High 4.370 4.850
4.200 3.980 Low 4.300 4.540
3.900 3.780 # of Analysts 14 14

3.600
2016 2017 2018 2019

MEAN ESTIMATE TREND ANALYST RECOMMENDATIONS

Q Q Y Y Price Thomson Reuters I/B/E/S Mean: Buy (17 Analysts)
18-12 19-03 2018 2019 Target
Current 1.049 1.110 4.340 4.708 79.10
Strong Buy 6
30 Days Ago 1.049 1.110 4.340 4.708 79.10 Buy 9
90 Days Ago 1.054 1.104 4.278 4.629 71.60 Hold 2
% Change (90 Days) -0.5% 0.5% 1.4% 1.7% 10.5%
Reduce 0
Current Fiscal Year End: 18-12
Next Expected Report Date: 2019-01-31 Sell 0

EARNINGS SURPRISES
Comparing a company's actual earnings to the mean expectation of Surprise Detail (Last 6 Periods)
analysts results in a difference referred to as a 'positive' or 'negative'
surprise. Research has shown that when a company reports a Surprise Announce Period End Actual Mean Surprise
surprise, it is often followed by more of the same surprise type. Type Date Date EPS EPS (%)
Surprise Summary (Last 12 Quarters) Positive 2018-10-25 2018-09-30 1.190 1.140 4.4%
Positive 2018-07-27 2018-06-30 1.060 1.030 2.9%
Surprise Type Amount Percent
Positive 2018-05-01 2018-03-31 1.050 0.999 5.1%
Positive Quarters (> 2%) 11 91.7%
Positive 2018-02-02 2017-12-31 0.980 0.935 4.8%
Negative Quarters (< -2%) 0 --
Positive 2017-10-27 2017-09-30 1.110 1.032 7.6%
In-Line Quarters (within 2%) 1 8.3%
Positive 2017-07-28 2017-06-30 1.010 0.874 15.6%

ANNUAL REVENUE
A pattern of increasing sales in Actuals Estimates
conjunction with a rising EPS may
influence a buy recommendation, while 48B HIGH
2018 2019
flat or falling sales and faltering 46B
earnings may explain a sell Mean 42.3B 44.5B
recommendation. A rising EPS with flat MEAN
44B LOW
High 42.6B 47.6B
or falling sales may result from
increased cost efficiency and margins, 42B
Low 42.1B 43.5B
rather than market expansion. This 39.8B 40.1B Forecasted Growth 5.5% 10.9%
chart shows the sales forecast trend of 40B
# of Analysts 14 13
all analysts and the highest and lowest
projections for the current and next 38B
2016 2017 2018 2019
fiscal year.

Page 4 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

FUNDAMENTAL
NEUTRAL OUTLOOK: Fundamentals relatively Fundamental Score Averages
in-line with the market. Pharmaceuticals Group: 4.9 Mega Market Cap: 6.1
Pharma. & Med. Research Sector: 4.8 S&P 500 Index: 6.1

Q4 Q1 Q2 Q3
Fundamental Score Trend Peers 2017 2018 2018 2018 Current 3Y Trend
PFE 6 6 6 6 6
Positive
AMGN 7 8 8 8 5
Neutral MRK 4 4 4 3 5

Negative JNJ 2 5 5 5 4

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ABT 4 3 3 3 3
2016 2017 2018

FUNDAMENTAL INDICATORS
Profitability Debt Earnings Quality Dividend
(25% weight) (25% weight) (25% weight) (25% weight)

ABT
JNJ
PFE
AMGN
MRK

MRK PFE
ABT AMGN
PFE
AMGN JNJ
JNJ MRK

AMGN
ABT
ABT PFE
JNJ
MRK

Revenue Growth 4.8% Current Ratio 1.4 Oper. Cash Yield 239.0% Dividend Growth 2.1%
For year over year For interim period For latest 12 months For year over year
ending 2018-09 ending 2018-09 ending 2018-09 ending 2018-09
Gross Margin 67.4% Debt-to-Capital 38.2% Accruals -13.4% Dividend Payout 90.3%
For latest 12 months For annual period For latest 12 months For latest 12 months
ending 2018-09 ending 2017-12 ending 2017-12 ending 2018-09
Return On Equity 9.5% Interest Funding 7.0% Days Sales In Inv. 228.9 Dividend Coverage 1.2
For interim period For interim period For annual period For annual period
ending 2018-09 ending 2018-03 ending 2017-12 ending 2017-12
Net Margin 8.0% Interest Coverage 14.6 Days Sales In Rec. 63.2 Current Div. Yield 2.8%
For latest 12 months For interim period For annual period For latest 12 months
ending 2018-09 ending 2018-09 ending 2017-12 ending 2018-12

HIGHLIGHTS
- Merck & Co Inc currently has a relatively neutral Fundamental Rating
of 5. The average Fundamental Rating for its Pharmaceuticals
industry is 4.8 and the S&P 500 index average is 6.1.
- The company's gross margin has been higher than its industry
average for each of the past five years.
- The company's debt-to-capital has been higher than its industry
average for each of the past five years.
- The company's days sales in inventory has been higher than its
industry average for each of the past five years.
- Of the 171 firms within the Pharmaceuticals industry, Merck & Co Inc
is among 24 companies that pay a dividend. The stock's dividend
yield is currently 2.8%.

Page 5 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

RELATIVE VALUATION
NEGATIVE OUTLOOK: Multiples significantly Relative Valuation Score Averages
above the market or the stock's historic norms. Pharmaceuticals Group: 5.5 Mega Market Cap: 4.9
Pharma. & Med. Research Sector: 5.2 S&P 500 Index: 5.1

Relative Valuation Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive PFE 8 7 6 6 5
MRK 3 3 3 3 3
Neutral AMGN 2 2 2 2 2
JNJ 3 2 2 2 2
Negative
ABT 2 2 1 1 1
2015-12 2016-12 2017-12 2018-12

RELATIVE VALUATION INDICATORS

Forward PEG Trailing PE Forward PE
(50% weight) (25% weight) (25% weight)

PFE

AMGN
MRK PFE
PFE JNJ
MRK

AMGN
ABT
MRK
JNJ ABT
ABT
AMGN
JNJ

Forward PEG 1.8 Trailing PE 60.5 Forward PE 17.3

5-Yr Average 3.1 5-Yr Average 37.3 5-Yr Average 15.8
Rel. to 5-Yr Avg. 42% Discount Rel. to 5-Yr Avg. 62% Premium Rel. to 5-Yr Avg. 9% Premium
S&P 500 Index 1.1 S&P 500 Index 21.6 S&P 500 Index 16.6
Rel. to S&P 500 68% Premium Rel. to S&P 500 >100% Premium Rel. to S&P 500 4% Premium

HIGHLIGHTS
- Merck & Co Inc currently has a Relative Valuation Rating of 3 which is - Based on Trailing P/E, MRK currently trades at a 50% Premium to its
significantly below the S&P 500 index average rating of 5.1. Pharmaceuticals industry peers. On average, the company has
traded at a 13% Premium over the past five years.
- Compared to the Pharmaceuticals industry, MRK is currently trading at
a significant premium based on both Trailing P/E and Forward PEG. - MRK's Forward P/E of 17.3 represents a 9% Premium to its 5-year
average of 15.8.
- MRK's 1.8 Forward PEG is currently at the low end of its 5-year range
(lowest 1.7 to highest 5.0).

Page 6 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

PRICE TO SALES TRAILING PE

The most recent week's close price divided by the revenue per share. The most recent week's close price divided by the sum of the four most
recently reported quarterly earnings.
Price to Sales: 4.9 Trailing PE: 60.5
5-Year Average: 4.0 5-Year Average: 37.3
S&P 500 Index Average: 2.0 S&P 500 Index Average: 21.6
Pharmaceuticals Industry Average: 4.2 Pharmaceuticals Industry Average: 40.2
5.2 >50
5.0 45
4.8 40
5-Yr Average
4.6 35
4.4 30
4.2 25
4.0 5-Yr Average 20
3.8 15
3.6 10
3.4 5
3.2 0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

FORWARD PE FORWARD PEG

The most recent week's close price divided by the sum of the four The Forward P/E divided by the five-year forecasted growth rate.
upcoming quarterly consensus estimates.
Forward PE: 17.3 Forward PEG: 1.8
5-Year Average: 15.8 5-Year Average: 3.1
S&P 500 Index Average: 16.6 S&P 500 Index Average: 1.1
Pharmaceuticals Industry Average: 16.0 Pharmaceuticals Industry Average: 1.1
22 >5.0
21 4.5
20 4.0
19 3.5
18 3.0 5-Yr Average

17 2.5
16 5-Yr Average 2.0
15 1.5
14 1.0
13 0.5
12 0.0
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

RISK
POSITIVE OUTLOOK: Consistent return Risk Score Averages
patterns (low volatility). Pharmaceuticals Group: 3.6 Mega Market Cap: 8.8
Pharma. & Med. Research Sector: 2.8 S&P 500 Index: 8.1

Risk Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive ABT 10 10 10 10 10
JNJ 10 10 10 10 10
Neutral MRK 10 10 10 10 10
PFE 10 10 10 10 10
Negative
AMGN 9 9 9 9 9
2015-12 2016-12 2017-12 2018-12

RISK INDICATORS
Magnitude of Returns Volatility Beta (1-year) Correlation
(25% weight) (25% weight) (25% weight) (25% weight)

JNJ ABT ABT

MRK AMGN AMGN
PFE JNJ MRK MRK
ABT MRK PFE
AMGN PFE JNJ

JNJ
PFE

ABT
AMGN

Daily Returns (Last 90 Days) Standard Deviation Beta vs. S&P 500 0.67 Correlation vs. S&P 500
Best 2.5% Last 90 Days 1.12 Positive Days Only 0.47 Last 90 Days 64%
Worst -3.0% Last 60 Months 4.91 Negative Days Only 0.78 Last 60 Months 42%
Monthly Returns (Last 60 Months) Intra-Day Swing (Last 90 Days) Beta vs. Group 0.40 Correlation vs. Group
Best 10.7% Average 1.8% Positive Days Only 0.14 Last 90 Days 35%
Worst -14.0% Largest 6.4% Negative Days Only 0.70 Last 60 Months 34%

HIGHLIGHTS RISK ANALYSIS

- Merck & Co Inc currently has a Risk Rating of 10 while the S&P Last 90 Days Last 60 Months
500 index has an average rating of 8.1. Best Worst # # Largest Best Worst
- On days when the market is up, MRK shares tend to lag the Daily Daily Days Days Intra-Day Monthly Monthly
S&P 500 index. However, on days when the market is down, Peers Return Return Up Down Swing Return Return
the shares generally decrease less than the index. MRK 2.5% -3.0% 37 26 6.4% 10.7% -14.0%
- In both short-term and long-term periods, MRK has shown high
correlation (>= 0.4) with the S&P 500 index. Thus, this stock ABT 4.5% -3.3% 38 26 4.0% 16.0% -17.4%
would provide only low levels of diversification to a portfolio AMGN 3.6% -4.9% 37 26 5.6% 15.5% -15.4%
similar to the broader market.
- Over the last 90 days, MRK shares have been less volatile than JNJ 2.3% -3.0% 39 25 4.3% 9.2% -6.2%
the overall market, as the stock's daily price has fluctuated less PFE 3.2% -3.8% 37 27 5.3% 10.1% -10.7%
than 95% of S&P 500 index firms.
S&P 500 2.3% -3.3% 26 36 3.9% 8.3% -6.9%

Page 8 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

PRICE MOMENTUM Currency in USD

POSITIVE OUTLOOK: Strong recent price Price Momentum Score Averages

performance or entering historically favorable Pharmaceuticals Group: 6.4 Mega Market Cap: 7.2
seasonal period. Pharma. & Med. Research Sector: 6.1 S&P 500 Index: 6.6

Price Momentum Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive ABT 9 9 10 8 10
AMGN 9 8 5 8 10
Neutral JNJ 3 7 9 9 10
MRK 9 8 10 10 10
Negative
PFE 7 9 9 9 10
2015-12 2016-12 2017-12 2018-12

PRICE MOMENTUM INDICATORS

Relative Strength Seasonality
(70% weight) (30% weight)

ABT
AMGN
JNJ ABT
MRK
PFE

AMGN
MRK
PFE
JNJ

Relative Strength Indicator (Scale from 1 to 100) Average Monthly Return (Last 10 Years)
MRK Industry Avg DEC JAN FEB
Last 1 Month 69 49 Company Avg 1.6% 1.9% -2.4%
Last 3 Months 63 48 Industry Avg 3.2% 3.4% 1.7%
Last 6 Months 59 49 Industry Rank 65 of 123 12 of 123 25 of 123

PRICE PERFORMANCE
Daily close prices are used to calculate the MRK MRK DJIA
performance of the stock as compared to a
DJIA Close Price (2018-12-03) 79.22 25,826
relevant index over five time periods.
52-Week High 79.58 26,828
5%
1-Week 52-Week Low 52.83 23,533
4.8%

9.6% - The Price Momentum Rating for Merck & Co Inc is at its 3-year
1-Month
2.2% high of 10.
- On 2018-12-03, MRK closed at 79.22, 0.4% below its 52-week
15.5%
3-Month high and 50.0% above its 52-week low.
-0.5%
- MRK shares are currently trading 8.4% above their 50-day
40.8% moving average of 73.10, and 23.2% above their 200-day
YTD moving average of 64.30.
4.5%

41.8%
1-Year
6.6%

Page 9 of 12
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 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

INSIDER TRADING Currency in USD

NEGATIVE OUTLOOK: Recent or longer-term Insider Trading Score Averages

trend of selling by company insiders. Pharmaceuticals Group: 5.3 Mega Market Cap: 3.9
Pharma. & Med. Research Sector: 5.1 S&P 500 Index: 4.2

Insider Trading Score Trend (4-Week Moving Avg) Peers -6M -3M -1M -1W Current 1Y Trend

Positive PFE 2 1 5 7 7
AMGN 5 5 4 4 4
Neutral JNJ 5 2 2 2 2
ABT 1 2 2 3 1
Negative
MRK 1 1 1 1 1
2015-12 2016-12 2017-12 2018-12

INSIDER TRADING INDICATORS

Short-Term Insider Long-Term Insider
(70% weight) (30% weight)

PFE PFE

ABT
JNJ
AMGN
ABT
JNJ
MRK
MRK
AMGN

Most Recent Buys and Sells (Last 90 Days) Insider Summary (Last 6 Months)
Insider Name Role Tran Date Tran Type Shares Total Shares Acquired 1,629,043
Perlmutter, Roger M O 2018-11-08 S 225,443 Total Shares Disposed 1,675,497
Gerberding, Julie Louise O 2018-11-07 S 36,218 Net Shares -46,454
Schechter, Adam H O 2018-11-01 S 277,879 Sector Average 891,429

HIGHLIGHTS MONTHLY BUYS AND SELLS

- Merck & Co Inc currently has an Insider Trading Rating of 1, which is BUYS $ Market Value (Millions)
60
significantly more bearish than the Pharmaceuticals industry average
of 5.27. 30
Excludes
- This quarter's $65,698,416 sell total represents the highest level of 0 derivative
quarterly selling at Merck & Co Inc over the past five years. The and option
average quarterly sell total for the company is $12,914,190. 30 exercises
60
SELLS
J F M A M J J A S O N D

TOP INSTITUTIONAL HOLDERS TOP EXECUTIVE HOLDERS

Inst. % Shares Reported Direct Reported
Institution Name Type O/S Held Date Insider Name Role Shares Value Date
The Vanguard Group Inc Inv Mgmt 7.8% 203M 2018-09-30 Frazier, Kenneth C CEO 0.69M 52.6M 2018-10-03
BlackRock Institutional Inv Mgmt 4.7% 121M 2018-09-30 Perlmutter, Roger M O 0.14M 10.8M 2018-11-08
State Street Global Inv Mgmt 4.3% 113M 2018-09-30 Davis, Robert M CFO 0.11M 8.14M 2018-05-08
Capital World Investors Inv Mgmt 3.4% 87.3M 2018-09-30 Graddick-Weir, Mirian M O 80,433 6.12M 2018-05-08
Wellington Management Inv Mgmt 2.7% 70.3M 2018-09-30 Holston, Michael J. GC 69,786 5.31M 2018-02-27
Updated daily as of 2018-12-03 Updated monthly as of 2018-11-18

Page 10 of 12
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MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT TIPS
The Thomson Reuters Stock Report is a comprehensive, company-specific analysis
that includes a proprietary Stock Rating along with underlying component indicators
and supportive data elements. The report is updated daily, although some of the
data elements and the ratings are updated weekly.
Average Score
The Average Score combines a quantitative analysis of six widely-used investment
decision making tools - Earnings, Fundamental, Relative Valuation, Risk, Price
Momentum, and Insider Trading. First, a simple average of the six underlying
component ratings is calculated. Then, a normal distribution is used to rank each
stock across the market on a scale of 1 to 10, with 10 being most favorable. A
score of 8 to 10 is considered positive, 4 to 7 is neutral, and 1 to 3 is negative. These
six factors may be evaluated differently using alternative methodologies, and the
importance of individual factors varies across groups, market capitalization and
investment styles. Additional criteria should always be used to evaluate a stock.
A company must have sufficient data available for at least four of the six component
indicators in order to receive an overall Average Score. Approximately 85% of the
stocks within the coverage universe meet the criteria to generate a score.
Optimized Score
As an alternative to the average score, the Stock Report includes an Optimized Score
generated by independent research firm, Verus Analytics. It uses the same six
component ratings, but rather than equally weighting each of the factors, the
weighting varies by market capitalization of the underlying security based on
backtesting research. These scores are also updated weekly and distributed
normally on a 1 to 10 scale, with 10 being best. The variable size is assigned
monthly by ranking the market capitalization and assigning the appropriate category
as follows:
Large - Top 5.55%
Mid - Next 13.87%
Small - Next 34.68%
Micro - Remaining 45.9%
Indicator Components
The six indicators that comprise the stock rating are displayed. Like the stock rating,
the component rating scale is 1 to 10, with 10 being best. A company will receive
an ‘NR’ for No Rating if the required data elements or criteria are not met. A
detailed section for each component is included in the report.
Indicator Trends
Within each component section, historical score trends are displayed, typically using
a 4-week moving average over a timeframe of the past three years. The dotted
orange line indicates the average of the scores over those three years. The most
recent occurrences of the best and worst scores are also displayed on the chart in
grey boxes to put the current score into historical context.
Next to the trend chart for the company, current score averages are included, along
with peer company comparisons of values from 6 months ago, 3 months ago, 1
month ago, the most recent value from 1 week ago, and the current score. The four
closest industry peers are presented based on similar market capitalization.
Peer Analysis
● The Thomson Reuters Business Classification (TRBC) system is used for
industry comparisons. It is designed to track and display the primary business of
a corporation by grouping together correlated companies that offer products and
services into similar end markets. The system includes 10 Economic Sectors, 28
Business Sectors, 54 Industry Groups, and 136 Industries.
● The Peer Analysis section of the report compares the company to its ten closest
peers. The peers are selected from the industry based on similar market
capitalization. The peer listing may have fewer than ten companies if there are
fewer than ten companies classified within that industry.
Highlights
The Thomson Reuters proprietary automated text-generation system creates
highlights summarizing the most noteworthy data. The bullets will vary by company
and will change from week to week as different criteria are met.
Earnings
The Earnings Rating is based on a combination of three factors: earnings surprises,
estimate revisions, and recommendation changes. Each factor is equally weighted.
Then, equal deciles are used to rank each stock across the market on a scale of 1
to 10, with 10 being most favorable. A stock needs to have at least two of the three
earnings factors in order to receive a score.
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© 2018 Thomson Reuters. All rights reserved.
STOCKREPORTS+
DETAILED STOCK REPORT
Report Date: 2018 December 04
● Earnings Surprises - The number of positive and negative surprises within the
last 4 quarters.
● Estimate Revisions - The number of up and down revisions and the average
percentage change of those revisions within a 4 week period.
● Recommendation Changes - The number of broker upgrades and downgrades in
the last 120 days.
Price Target
The price target is based on the predictions of analysts covering the stock and
shows the high, low and mean price expected within the next 12 months.
Earnings Per Share
The quarterly and annual earnings per share are presented when available, along
with the mean, high and low. Quarterly data is displayed for the past 4 quarters
(actual) and the next 2 quarters (estimated). Annual data is displayed for the past 2
years (actual) and the next 2 years (estimated).
Mean Estimate Trend
The mean estimates show how the consensus has changed over the past 30 days
and 90 days for the upcoming two quarters and two years. The percentage change
is calculated for the company as a means for comparison by measuring the
difference between the current consensus estimate and that of 90 days ago.
Analyst Recommendations
The I/B/E/S Mean is the average recommendation of all analysts covering the stock,
as provided by Thomson Reuters I/B/E/S (Institutional Brokers Estimate System).
The recommendations are presented on a five-point standardized scale: strong buy,
buy, hold, reduce, and sell.
Earnings Surprises
● The surprise summary includes the total number of quarters (and percentage) in
the past 12 quarters in which earnings surprises were positive, negative, or in-
line. In order to be recognized as a positive or negative surprise, the percent
must be greater than 2% above or 2% below the consensus, respectively.
● The surprise detail section includes a listing of the company's quarterly earnings
reported for the most recent 6 quarters. The consensus analyst estimate is
provided to determine if the actual earnings report represented a positive
surprise, negative surprise, or in-line result.
Fundamental
The Fundamental Rating is based on a combination of four factors: profitability,
debt, earnings quality, and dividend. Companies that do not pay a dividend are not
penalized. Each factor is equally weighted. Then, equal deciles are used to rank
each stock across the market on a scale of 1 to 10, with 10 being most favorable. A
stock needs to have at least two of the four fundamental factors present for a given
fiscal quarter in order to receive a score.
● Profitability is comprised of four data elements.
- Revenue Growth: (Net Sales – Previous Net Sales) / Previous Net Sales
- Gross Margin: Gross Profit / Net Sales
- Return on Equity: Net Income / Total Equity
- Net Margin: Net Profit / Net Sales
● Debt is comprised of four data elements.
- Current Ratio: Current Assets / Current Liabilities
- Debt-to-Capital: Total Debt / Total Capital
- Interest Funding: (Interest Expense on Debt + Preferred Cash Dividends) /
Funds from Operations
- Interest Coverage: Earnings before Interest and Taxes / (Interest Expense on
Debt + Preferred Cash Dividends)
● Earnings Quality is comprised of four data elements.
- Operating Cash Yield: (Operating Cash Flow – Net Income) / Net Income
- Accruals: (Net Income – Operating Cash Flow – Investing Cash Flow) /
Average Net Operating Assets
- Days Sales in Inventory: 365 / (Cost of Goods Sold / Inventory)
- Days Sales in Receivables: 365 / (Net Sales / Receivables)
● Dividend is comprised of four data elements. The company must have a current
dividend yield.
- Dividend Growth Rate: (Dividends per Share – Previous Dividends per Share)
/ Previous Dividends per Share
- Dividend Payout: Dividends per Share / Earnings per Share
- Dividend Coverage: Funds from Operations / Cash Dividends
- Dividend Yield: Annual Dividends per Share / Current Market Price per Share
Indicator Trend
The fundamental indicator trend displays quarterly scores over the past three years.
The best and worst scores over that timeframe can be easily determined from the
values shown on the chart for each quarter.
 STOCKREPORTS+
MERCK & CO INC (MRK-N)
Pharma. & Med. Research / Pharmaceuticals / Pharmaceuticals
DETAILED STOCK REPORT
Report Date: 2018 December 04

Relative Valuation ● Long-Term Insider – Looks at buying, selling and option exercise decisions over
The Relative Valuation Rating is based on a combination of three factors: Forward the past six months relative to other stocks within the same business sector. The
PEG (50% weight), Trailing P/E (25% weight), and Forward P/E (25% weight). After net shares are presented alongside the business sector average as a means of
the weightings are considered to combine individual factors, equal deciles are used comparison.
to rank each stock across the market on a scale of 1 to 10, with 10 being most
favorable. These common valuation metrics are evaluated against the overall Monthly Buys and Sells
market, the index, and the company's own historic 5-year averages. A stock needs The total market value of open-market buying and selling is displayed by month in
to have at least one of the three relative valuation factors in order to receive a score. the chart for easy comparison. Transactions by trusts and corporations are
excluded, along with buys greater than $10 million and sales greater than $50
● Trailing P/E: Close Price / Most Recent 4 Quarters of Earnings million. Transactions for the exercise of derivatives and option exercises are
● Forward P/E: Close Price/ Upcoming 4 Quarters of Earnings excluded from the totals.
● Forward PEG: Forward P/E / Long-Term Forecasted Growth Rate
Institutional Holders
Valuation Averages The top five institutional holders of the company are listed in descending order,
Negative values are excluded when calculating the averages. A maximum value of based on their total share holdings. Possible values for the institution type include
100 is placed on Trailing P/E and Forward P/E, a maximum value of 5 is placed on Brokerage, Funds, Inv Mgmt, or Strategic.
Forward PEG, and a maximum value of 20 is placed on Price to Sales when
calculating the averages. Higher values are rounded down to the maximum for the Executive Holders
averages. The top five executive insiders of the company are listed in descending order, based
on their total direct common share holdings (options are not considered). Indirect
Valuation Multiples holdings are excluded, as the owner may not actually have investment discretion
The valuation multiples provide the Trailing P/E, Forward P/E, Forward PEG, and over these shares. This table is updated monthly. Insiders who have not filed any
Price to Sales for the company and the S&P 500 index average. In addition, a transactions or holdings over the past two years are excluded as this may indicate
comparison of the current company’s values to its 5-year average and an industry that the individual is no longer associated with the company. Additionally, direct
average are presented. A discount occurs when the company’s ratio is valued more shares held must be greater than 1,000 to be considered.
favorably (lower) than that to which it is compared.
Insider Roles
Risk These role codes may appear in the data for recent insider buys and sells or top
The Risk Rating displays stocks on a scale of 1 to 10 with 10 being awarded to the executive holders:
least risky stocks. It is derived by looking at a series of long-term (5-year) and
short-term (90-day) stock performance measures including volatility, magnitude of AF - Affiliate IA - Investment Advisor
returns, beta, and correlation. Each factor is equally weighted. Then, equal deciles AI - Affiliate of Advisor MC - Member of Committee
are used to rank each stock across the market. A stock needs to have at least two B - Beneficial Owner MD - Managing Director
of the four risk factors in order to receive a score. C - Controller O - Officer
CB - Chairman OB - Officer / Beneficial Owner
● Magnitude of Returns – The best / worst daily returns in the past 90 days and the CEO - Chief Executive Officer OD - Officer / Director
best / worst monthly returns in the past 60 months. CFO - Chief Financial Officer OE - Other Executive
● Volatility – The standard deviation of the stock price over the last 90 days and CI - Chief Investment Officer OS - Officer of Subsidiary
last 60 months, along with the average and largest intra-day stock swing. CO - Chief Operating Officer OT - Officer / Treasurer
● Beta – Measures the tendency of a security’s returns to respond to swings in the CT - Chief Technology Officer OX - Divisional Officer
market, based on the beta of the company versus the relevant index. D - Director P - President
● Correlation – Determines how closely the returns of the stock and the relevant DO - Director / Beneficial Owner R - Retired
index move together, measured over the last 90 days and last 60 months. DS - Indirect Shareholder S - Secretary
EC - Member of Exec Committee SH - Shareholder
Risk Analysis EVP - Exec Vice President SVP - Senior Vice President
Price analysis for the company and the S&P 500 is provided over two time periods. FO - Former T - Trustee
Daily analysis is provided for the last 90 days, whereas monthly statistics are used GC - General Counsel UT - Unknown
for the last 60 months. GP - General Partner VC - Vice Chairman
H - Officer / Director / Owner VP - Vice President
Price Momentum
The Price Momentum Rating is based on a combination of two technical
performance factors: relative strength (70% weight) and seasonality (30% weight).
After the weightings are considered to combine individual factors, equal deciles are
DISCLAIMER
used to rank each stock across the market on a scale of 1 to 10, with 10 being most
favorable. A stock needs to have data for the relative strength factor in order to Republication or redistribution of Thomson Reuters content, including by framing
receive a score. or similar means, is prohibited without the prior written consent of Thomson
Reuters. All information in this report is assumed to be accurate to the best of our
● Relative Strength – The relative strength of the company for the last 1 month, 3 ability. Thomson Reuters is not liable for any errors or delays in Thomson
months, and 6 months on a scale of 1 to 100. Reuters content, or for any actions taken in reliance on such content.
● Seasonality – The average monthly return (price performance) for the current
month and next 2 months for the company and industry, over the past 10 years. Any forward-looking statements included in the Thomson Reuters content are based
A lower industry rank indicates a higher return. on certain assumptions and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from current expectations. There is no
Price Performance assurance that any forward-looking statements will materialize.
Daily close prices are used to calculate the price performance of the stock. The
performance of the S&P 500 is also displayed as a means of comparison. The content in this Thomson Reuters report does not constitute investment advice
or a recommendation to buy or sell securities of any kind. Past performance is not a
Insider Trading guarantee of future results. Investors should consider this report as only a single
The Insider Trading Rating is based on short-term (70% weight) and long-term (30% factor when making an investment decision.
weight) legal insider trading behavior. After the weightings are considered to
combine individual factors, a function similar to a normal distribution is used to rank
each stock across the market on a scale of 1 to 10, with 10 being most favorable. A
stock needs to have at least one of the two insider trading factors in order to receive
a score.

● Short-Term Insider – Uses insider buy and sell transactions within the past 90
days. This factor is based on the Thomson Reuters quantitative insider trading
model that considers the insider's role, consensus, number of shares, market
capitalization of the company, and the historic stock performance following trades
by the given insider.

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