Contrasting Nuvalent (NASDAQ:NUVL) and Merck KGaA (OTCMKTS:MKGAF)

Merck KGaA (OTCMKTS:MKGAF) and Nuvalent (NASDAQ:NUVL) are both medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, earnings, profitability and valuation.

Insider & Institutional Ownership

0.1% of Merck KGaA shares are held by institutional investors. Comparatively, 97.3% of Nuvalent shares are held by institutional investors. 14.8% of Nuvalent shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Merck KGaA has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Nuvalent has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.

Profitability

This table compares Merck KGaA and Nuvalent’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merck KGaA	13.47%	12.18%	6.72%
Nuvalent	N/A	-25.74%	-24.50%

Analyst Ratings

This is a summary of recent ratings and price targets for Merck KGaA and Nuvalent, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merck KGaA	0	0	0	0	N/A
Nuvalent	0	1	9	0	2.90

Nuvalent has a consensus target price of $90.78, suggesting a potential upside of 33.69%. Given Nuvalent’s higher possible upside, analysts clearly believe Nuvalent is more favorable than Merck KGaA.

Valuation and Earnings

This table compares Merck KGaA and Nuvalent’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merck KGaA	$22.72 billion	0.89	$3.06 billion	$7.03	22.19
Nuvalent	N/A	N/A	-$126.22 million	($2.16)	-31.25

Merck KGaA has higher revenue and earnings than Nuvalent. Nuvalent is trading at a lower price-to-earnings ratio than Merck KGaA, indicating that it is currently the more affordable of the two stocks.

Summary

Merck KGaA beats Nuvalent on 7 of the 12 factors compared between the two stocks.

About Merck KGaA

Merck KGaA operates as a science and technology company in Germany. It operates through Life Science, Healthcare, and Electronics segments. The company's Life Science segment offers tools, chemicals, and equipment for academic labs, biotech, and pharmaceutical manufacturers, as well as industrial sector. This segment provides drug manufacturers with process development expertise and technologies, such as continuous bioprocessing; testing kits and services; reagents and services; testing solutions that analyze air, water, and soil; and testing and tools, as well as products that help test nutritional value and identify quality inconsistencies. Its Healthcare segment discovers, develops, manufacturers, and markets prescription drugs and biopharmaceuticals for the treatment of oncology, neurology and immunology, fertility, endocrinology, as well as cardiovascular, diabetes, thyroid disorders, and multiple sclerosis; general medicines; and injection device and disease monitoring software. The Electronics segment supplies materials for the semiconductor and display industries and surface design, such as delivery systems and services, as well as surface solutions, including cosmetics, effect pigments, and functional solutions. In addition, it has in-licensing agreement with Debiopharm International SA for developing and commercializing drug candidates for the treatment of head and neck cancer; Jiangsu Hengrui Pharmaceuticals Co. Ltd. for developing, manufacturing, and commercializing drug candidates for the treatment of metastatic colorectal cancer; and Abbisko Therapeutics Co. Ltd. for developing and commercializing of drug candidates for the treatment of tenosynovial giant cell tumor, as well as license and collaboration agreement with Merck KGaA to discover two targeted protein degraders against critical oncogenic proteins. The company was founded in 1668 and is headquartered in Darmstadt, Germany. Merck KGaA operates as a subsidiary of E. Merck KGaA.

About Nuvalent

Nuvalent, Inc., a clinical stage biopharmaceutical company, engages in the development of therapies for patients with cancer. Its lead product candidates are NVL-520, a novel ROS1-selective inhibitor to address the clinical challenges of emergent treatment resistance, central nervous system (CNS)-related adverse events, and brain metastases that may limit the use of ROS1 tyrosine kinase inhibitors (TKIs) for patients with ROS proto-oncogene 1 (ROS1)-positive non-small cell lung cancer (NSCLC) which is under the phase 2 portion of the ARROS-1 Phase 1/2 clinical trial; NVL-655, a brain-penetrant ALK-selective inhibitor, to address the clinical challenges of emergent treatment resistance, CNS-related adverse events, and brain metastases that might limit the use of first-, second-, and third-generation ALK inhibitors that is under the phase 2 portion of the ALKOVE-1 Phase 1/2 clinical trial; and NVL-330, a brain-penetrant human epidermal growth factor receptor 2 (HER2)-selective inhibitor designed to treat tumors driven by HER2ex20, brain metastases, and avoiding treatment-limiting adverse events including due to off-target inhibition of wild-type EGFR, which is expected to initiate phase 1 trial. The company was incorporated in 2017 and is headquartered in Cambridge, Massachusetts.