Merus (MRUS) AI Stock Analysis

• Market Cap: $3.29B
• Dividend Yield: N/A
• Average Volume (3M): 621.94K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.23
• Revenue Growth: -17.78%
• EPS Growth: -10.95%
• Country: US
• Employees: 229
• Sector: Healthcare
• Sector Strength: 78
• Industry: Biotechnology
• EPS (TTM): -3.31
• Shares Outstanding: 69,090,470
• 10 Day Avg. Volume: 747,268
• 30 Day Avg. Volume: 621,942
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 90.98
• Price to Cash Flow (P/CF): -12.30
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $87.83
• Price Target Upside: 84.36% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 14

Merus's stock faces considerable challenges primarily due to poor financial performance characterized by negative profitability and cash flow issues. While the company's balance sheet shows low leverage, it fails to leverage its equity effectively. Technical indicators suggest positive market momentum, but the valuation remains unattractive with negative earnings. Investors should be cautious due to the operational inefficiencies and the need for strategic improvements in revenue generation and cash flow management.

Positive Factors

Clinical Development

Petosemtamab continues to show impressive efficacy and safety in HNSCC indications, now with breakthrough therapy and fast-track designations in both 1L and 2L+ settings.

Financial Health

The company reported cash and cash equivalents of $724mn, which they estimate will provide a cash runway into 2028.

Regulatory Approvals

The FDA's granting of Breakthrough Therapy Designation for peto reinforces its differentiated profile and continues to give investors confidence.

Negative Factors

Merus Business Overview & Revenue Model

Company Description

Merus N.V. (MRUS) is a clinical-stage oncology company that is engaged in the development of innovative multispecific antibody therapeutics. The company focuses on creating bispecific antibodies, known as Biclonics, for the treatment of various types of cancer. These products are designed to engage multiple targets simultaneously, offering a novel approach to cancer therapy.

How the Company Makes Money

Merus makes money primarily through the development and commercialization of its proprietary antibody platforms and products. The company generates revenue through collaboration and licensing agreements with larger pharmaceutical companies. These partnerships often include upfront payments, milestone payments based on development progress, and royalties on potential future sales of successfully developed products. Merus also seeks to advance its clinical pipeline, which could potentially lead to direct revenue from product sales if any of its therapeutic candidates receive regulatory approval and are commercialized.

Merus Financial Statement Overview

Summary

Merus is facing significant challenges in achieving profitability and maintaining sustainable cash flows. Despite a strong capital base with minimal debt, the company struggles with operational efficiency and consistent revenue growth, necessitating strategic focus on improving operational performance.

Income Statement

Merus has faced declining revenue and profitability challenges over recent years. The net profit margin remains negative due to substantial net losses, and EBIT and EBITDA margins are also negative, indicating operational inefficiencies. Revenue growth is inconsistent, with recent declines, raising concerns about revenue generation capabilities.

Balance Sheet

The balance sheet reflects a high equity ratio, suggesting a strong capital base with minimal debt obligations. However, the company has been unable to convert equity into positive earnings, as evidenced by negative ROE. The lack of leverage mitigates financial risk but highlights the need for more effective use of equity.

Cash Flow

Merus shows a negative operating cash flow and free cash flow, indicating cash outflows exceed inflows, which is concerning for liquidity. The free cash flow to net income ratio is negative, reflecting unsustainable cash conservation. Financing cash flows are positive, suggesting reliance on external funds for cash needs.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
36.13M	43.95M	41.59M	49.11M	29.94M
	Gross Profit
36.13M	43.95M	29.60M	-37.16M	-27.39M
	EBIT
-272.07M	-156.55M	-160.04M	-89.98M	-75.88M
	EBITDA
-269.60M	-154.01M	-148.26M	-77.75M	-60.93M
	Net Income Common Stockholders
-215.33M	-154.94M	-131.19M	-66.82M	-85.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
537.03M	355.18M	290.23M	410.43M	207.75M
	Total Assets
782.69M	455.49M	376.54M	456.60M	231.22M
	Total Debt
9.91M	12.16M	13.47M	3.75M	3.95M
	Net Debt
-283.38M	-192.88M	-134.28M	-237.68M	-159.13M
	Total Liabilities
134.77M	99.15M	129.49M	140.40M	128.95M
	Stockholders Equity
201.43M	356.34M	247.06M	316.20M	102.26M
Cash Flow		Free Cash Flow
-187.50M	-146.19M	-157.54M	-60.50M	-81.19M
	Operating Cash Flow
-185.84M	-142.21M	-149.90M	-59.63M	-79.90M
	Investing Cash Flow
-220.22M	-27.02M	2.80M	-146.62M	-1.49M
	Financing Cash Flow
494.01M	230.09M	58.74M	281.95M	39.52M

Merus Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 47.64
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRUS, the sentiment is Positive. The current price of 47.64 is above the 20-day moving average (MA) of 45.63, above the 50-day MA of 42.91, and below the 200-day MA of 49.04, indicating a neutral trend. The MACD of 1.42 indicates Negative momentum. The RSI at 59.86 is Neutral, neither overbought nor oversold. The STOCH value of 84.42 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MRUS.

Merus Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARGX	70 Outperform	$35.63B	45.56	-7.20%	―	101.07%	51.16%
MRUS	55 Neutral	$3.29B	―	-42.88%	―	-17.78%	-10.95%
Sector *	49 Neutral	$6.84B	0.05	-53.14%	2.48%	24.49%	-3.26%
KURA	45 Neutral	$591.93M	―	-42.91%	―	―	2.90%
ALLO	38 Underperform	$425.63M	―	-54.15%	―	―	―