At a glance
Overall, the performance of Merck shares was characterized by volatility in 2017. Following an upswing thanks to a favorable market environment in the first half, the share price visibly came under pressure in the second half of the year. The Merck share price decreased nearly 10% over the entire period, finishing the year at € 89.75. The performance of Merck shares was significantly weaker than that of the relevant comparative indices, all of which posted an increase during the same period. Merck shares were nearly 22 percentage points behind the comparative DAX® index, which rose by 13% over the full year. They were around 20 percentage points lower than the relevant chemical industry index, which increased by over 11% in 2017. The pharmaceutical industry index rose by more than 5% in 2017, thus outperforming Merck shares by 15 percentage points in the same period.
Since the end of 2016, our shares had seen a positive development that continued until early summer 2017. Among other things, this was driven by the marketing authorization of our immunotherapy Bavencio® (avelumab) for the treatment of patients with metastatic Merkel cell carcinoma (mMCC) as well as locally advanced or metastatic urothelial carcinoma by the U.S. Food and Drug Administration (FDA). The announced divestment of our Biosimilars business to Fresenius on April 24, 2017 also resonated positively with investors and analysts. In addition, equity markets were positively impacted by encouraging signals for the global economic environment as well as the sustained optimism of market participants on the future economic prospects of the United States following the presidential election in November 2016. Merck shares also benefited from this, increasing until May 12, 2017 to a new all-time high of € 114.40.
However, as of the middle of the second quarter, a visible share price correction set in for our shares. Various influential factors were responsible for this. Towards the end of the second quarter, the environment for equities became more challenging owing to rising interest rates in important capital markets and the continued strong development of the euro against the U.S. dollar. The latter also had considerably negative effects on the Merck share price since the company has a strong net exposure to the euro due to its geographic set-up. In Performance Materials, competition for liquid crystal materials in China increased in the course of the second quarter. These prolonged adaptation processes are impacting the profit development of our Performance Materials business in addition to the mentioned foreign exchange effects. Although in our report on the second quarter of 2017 we maintained our full-year guidance for EBITDA pre despite the intensification of these burdens compared with early summer 2017, capital market participants again reduced their earnings expectations for Merck. This led to noticeable profit taking and selling of shares by institutional investors.
Positive newsflow from the company could do little to counteract this development and continued uncertainty among investors and analysts. In June 2017, Merck presented clinical data on key pipeline products at the American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, Illinois (USA) as well as in a conference call. This was received positively by capital market participants along with other examples such as the European Commission marketing authorizations of our immunotherapy Bavencio® (avelumab) in the treatment of metastatic Merkel cell carcinoma (mMCC) and of cladribine tablets (trade name Mavenclad®) to treat relapsing multiple sclerosis in patients with high disease activity, and the closing of the divestment of our Biosimilars business. Likewise, the announcement on September 5, 2017 concerning the review of strategic options for our Consumer Health business temporarily helped lift our share price in a generally favorable equity market environment.
As part of our annual analyst and investor meeting, capital market participants again had the opportunity for intensive and in-depth discussions with the management of our business sectors on September 28, 2017. Overall, the event resonated well. However, in the period that followed, analysts and investors began lowering their earnings expectations, particularly with respect to fiscal 2018. Although the results of the third quarter were slightly above market expectations and the guidance for 2017 was confirmed despite currency headwinds, capital market participants’ uncertainty concerning the future earnings development remained unchanged and adversely impacted our shares in contrast to the general development of the stock market.
In 2017, the Merck Executive Board and the Investor Relations team gave in-depth briefings to more than 780 investors at investor conferences as well as during roadshows and conference calls. We thus significantly strengthened our presence further among financial market participants compared with the previous year.
The average daily trading volume of our shares increased minimally by around 1% from approximately 468,000 in 2016 to over 474,000 in 2017. The North America region continued to dominate, yet its proportion of the free float decreased to around 28% in comparison with the previous year. By investor type, GARP (growth at reasonable price) and value investors dominated, as in the previous year. In 2017, growing interest could be seen among growth-oriented investors, who meanwhile hold approximately 34% of the free float. At the end of 2017, the top five investors held around 19% of the free float (2016: 17%).
Share price development from January 1, 2017 to December 31, 2017
Key share price data1
|Share price high||€||114.40||100.05|
|Share price low||€||87.90||71.40|
|Year-end share price||€||89.75||99.15|
|Daily average number of Merck shares traded3||number||473,740||468,408|
|Market capitalization4 (at year-end)||€ million||39,021||43,108|
|Market value of authorized shares5 (at year-end)||€ million||11,599||12,814|
Identified investors by region as of December 2017
Identified investors by type as of December 2017