OGN - Organon: Post Earnings Dip Is A Buy Opportunity Based On Jaw-Dropping Fundamentals
- Organon was formed via the spin-out of Merck's Women's Health, Biosimilars and Established Brands divisions - shares began trading in May.
- On Nov. 11, the company reported Q321 earnings, affirming FY21 guidance for $6.2-$6.3bn.
- Based on nine-month performance, Organon ought to be profitable this year, and the forward P/S and P/E ratios of ~1.4x and <6x look very attractive.
- As revenues from Established Brands - $3bn this year - decline over time, the theory is that Women's Health and biosimilars will grow and drive mid single-digit organic growth.
- These divisions may not be making stellar progress, but they don't have to while Established Brands drive ~$4bn of revenues annually, with good margins. All things considered, the outlook for share price accretion looks very positive.
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Organon: Post Earnings Dip Is A Buy Opportunity Based On Jaw-Dropping Fundamentals