Organon (OGN) AI Stock Analysis

• Market Cap: $4.02B
• Dividend Yield: 7.47%
• Average Volume (3M): 3.29M
• Price to Earnings (P/E): 4.7
• Beta (1Y): 0.66
• Revenue Growth: 2.24%
• EPS Growth: -16.11%
• Country: US
• Employees: 10,000
• Sector: Healthcare
• Sector Strength: 78
• Industry: Pharmaceuticals
• EPS (TTM): 3.33
• Shares Outstanding: 257,950,130
• 10 Day Avg. Volume: 3,682,252
• 30 Day Avg. Volume: 3,286,566
• PEG Ratio: 0.02
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.63
• Price to Cash Flow (P/CF): 2.60
• P/FCF Ratio: 2.50
• 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: $19.20
• Price Target Upside: 28.00% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

Organon's overall stock score reflects a balance of strengths and weaknesses. The company shows strong cash flow and operational efficiency, but high leverage and declining net income pose risks. Valuation metrics suggest the stock is undervalued, offering potential upside. The earnings call indicates positive future growth with strategic cost-saving measures, tempered by challenges such as loss of drug exclusivity and pricing pressures.

Positive Factors

Product Launch

Management noted that VTAMA AD approval could come a little early which could represent incremental product sales upside.

Sales Growth

Nexplanon showed zero pregnancies in high BMI patients, which could raise the bar for generics, potentially exceeding $1.5bn in peak sales.

Negative Factors

Currency Impact

Seventy-five percent of OGN revenue is ex-US, so a strengthening USD could also create a currency headwind.

Financial Performance

Analyst reiterates an underperform rating due to limited growth and lack of re-rate catalysts.

Organon Business Overview & Revenue Model

Company Description

Organon & Co is a science-based global pharmaceutical company that develops and delivers health solutions through a portfolio of prescription therapies within women's health, biosimilars, and established brands. Its two operating segments are the Organon Products segment and the Merck Retained Products segment. It operates in the United States, China, Japan, Korea, and countries in Europe.

How the Company Makes Money

Organon generates revenue through the sale of its pharmaceuticals, which are distributed globally. The company's key revenue streams include its women's health segment, biosimilars, and a broad range of established brands. In women's health, Organon earns from sales of contraceptives and fertility treatments. Biosimilars offer a cost-effective alternative to branded biologic drugs, contributing to the company's revenue with products for autoimmune diseases and oncology. Additionally, Organon's established brands encompass a range of therapeutic areas, providing consistent cash flow. The company's earnings are also bolstered by strategic partnerships and collaborations with other pharmaceutical firms, expanding its reach and enhancing its product offerings across international markets.

Organon Financial Statement Overview

Summary

Organon shows solid operational performance with stable margins, but faces challenges with high leverage and declining net income. Cash flow remains robust, supporting its financial flexibility. Continued focus on reducing debt and boosting equity could enhance financial stability.

Income Statement

Organon's revenue shows modest growth with a recent increase from $6.263 billion to $6.403 billion. However, net income has declined from $1.023 billion to $864 million, impacting the net profit margin, which stood at 13.5% for the latest year. Gross profit margin remains strong at approximately 58%, though slightly declining from previous years. The EBIT and EBITDA margins are stable, indicating consistent operational efficiency despite revenue fluctuations.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio due to substantial debt levels and low equity base, with stockholders' equity at $472 million against $8.88 billion in total debt. The equity ratio is low at 3.6%, suggesting high leverage and potential financial risk. Return on equity is not meaningful due to previously negative equity, though net income remains positive.

Cash Flow

Cash flow from operations has seen growth, reaching $939 million, with free cash flow at $764 million. This indicates strong cash generation capability, although the free cash flow growth rate is constrained by higher capital expenditures and financing activities. The operating cash flow to net income ratio is favorable, suggesting efficient cash conversion from profits.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
6.40B	6.26B	6.17B	6.30B	8.10B
	Gross Profit
3.71B	3.75B	3.88B	3.92B	4.75B
	EBIT
1.49B	1.33B	1.48B	1.62B	2.85B
	EBITDA
1.60B	1.44B	1.69B	1.81B	2.99B
	Net Income Common Stockholders
864.00M	1.02B	917.00M	1.35B	2.16B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
675.00M	693.00M	706.00M	737.00M	500.00M
	Total Assets
13.10B	12.06B	10.96B	10.68B	10.43B
	Total Debt
8.88B	8.76B	8.91B	9.13B	31.00M
	Net Debt
8.21B	8.07B	8.21B	8.40B	-469.00M
	Total Liabilities
12.63B	12.13B	11.85B	12.19B	11.25B
	Stockholders Equity
472.00M	-70.00M	-892.00M	-1.51B	-820.00M
Cash Flow		Free Cash Flow
764.00M	538.00M	431.00M	1.97B	1.91B
	Operating Cash Flow
939.00M	799.00M	858.00M	2.46B	2.19B
	Investing Cash Flow
-513.00M	-260.00M	-420.00M	-481.00M	-258.00M
	Financing Cash Flow
-368.00M	-569.00M	-433.00M	-1.33B	-2.17B

Organon Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OGN, the sentiment is Negative. The current price of 15 is below the 20-day moving average (MA) of 15.16, below the 50-day MA of 15.20, and below the 200-day MA of 17.45, indicating a bearish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 48.33 is Neutral, neither overbought nor oversold. The STOCH value of 54.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OGN.

Organon Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JNJ	78 Outperform	$392.08B	28.13	20.06%	3.04%	-4.51%	3.69%
PFE	72 Outperform	$145.71B	18.25	9.05%	6.57%	8.77%	272.80%
MRK	71 Outperform	$235.81B	13.86	40.81%	3.34%	6.85%	4577.79%
ABBV	71 Outperform	$377.06B	89.36	61.94%	2.97%	3.71%	-12.14%
OGN	65 Neutral	$4.02B	4.68	429.85%	7.47%	2.24%	-16.11%
BMY	60 Neutral	$124.82B	―	-39.10%	4.05%	7.32%	-214.24%
Sector *	49 Neutral	$6.84B	0.05	-53.14%	2.48%	24.49%	-3.26%

Organon Corporate Events

Organon Reports 2024 Financial Results and 2025 Outlook

Organon announced its financial results for the fourth quarter and full year of 2024, reporting annual revenue of $6.4 billion, a 2% increase as-reported, and a 3% increase at constant currency. Despite challenges like the loss of exclusivity for Atozet in certain markets, the company aims for continued growth in 2025, with a revenue projection of $6.125 to $6.325 billion. The fourth quarter of 2024 showed flat revenue compared to the previous year, with notable performance in women’s health due to Nexplanon growth and competitive pressures on biosimilars. The company’s net income saw a decrease due to a one-time tax benefit in 2023, while non-GAAP adjusted net income remained stable.

Organon Announces Cessation of Chief Commercial Officer Role

On January 15, 2025, Organon & Co. announced the cessation of Susanne Fiedler’s role as Chief Commercial Officer, though she will remain as a senior advisor until her expected departure on or about April 30, 2025. This change may impact the company’s strategic operations and leadership dynamics as it navigates the transition period.