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Organon (OGN)
NYSE:OGN

Organon (OGN) AI Stock Analysis

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Organon

(NYSE:OGN)

65Neutral
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 (OGN) vs. S&P 500 (SPY)

Organon Business Overview & Revenue Model

Company DescriptionOrganon & 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 MoneyOrganon 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
65
Positive
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
45
Neutral
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
70
Positive
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 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
6.40B6.26B6.17B6.30B8.10B
Gross Profit
3.71B3.75B3.88B3.92B4.75B
EBIT
1.49B1.33B1.48B1.62B2.85B
EBITDA
1.60B1.44B1.69B1.81B2.99B
Net Income Common Stockholders
864.00M1.02B917.00M1.35B2.16B
Balance SheetCash, Cash Equivalents and Short-Term Investments
675.00M693.00M706.00M737.00M500.00M
Total Assets
13.10B12.06B10.96B10.68B10.43B
Total Debt
8.88B8.76B8.91B9.13B31.00M
Net Debt
8.21B8.07B8.21B8.40B-469.00M
Total Liabilities
12.63B12.13B11.85B12.19B11.25B
Stockholders Equity
472.00M-70.00M-892.00M-1.51B-820.00M
Cash FlowFree Cash Flow
764.00M538.00M431.00M1.97B1.91B
Operating Cash Flow
939.00M799.00M858.00M2.46B2.19B
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 Price15.00
Price Trends
50DMA
15.20
Negative
100DMA
15.36
Negative
200DMA
17.45
Negative
Market Momentum
MACD
>-0.01
Negative
RSI
48.33
Neutral
STOCH
54.31
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 Risk Analysis

Organon disclosed 45 risk factors in its most recent earnings report. Organon reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Organon Peers Comparison

Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
JNJNJ
78
Outperform
$392.08B28.1320.06%3.04%-4.51%3.69%
PFPFE
72
Outperform
$145.71B18.259.05%6.57%8.77%272.80%
MRMRK
71
Outperform
$235.81B13.8640.81%3.34%6.85%4577.79%
71
Outperform
$377.06B89.3661.94%2.97%3.71%-12.14%
OGOGN
65
Neutral
$4.02B4.68429.85%7.47%2.24%-16.11%
BMBMY
60
Neutral
$124.82B-39.10%4.05%7.32%-214.24%
49
Neutral
$6.84B0.05-53.14%2.48%24.49%-3.26%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
OGN
Organon
14.96
-2.27
-13.17%
BMY
Bristol-Myers Squibb
60.28
10.29
20.58%
JNJ
Johnson & Johnson
162.99
8.73
5.66%
MRK
Merck & Company
94.71
-23.34
-19.77%
PFE
Pfizer
25.60
-0.87
-3.29%
ABBV
AbbVie
211.55
36.72
21.00%

Organon Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: 3.95% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
Organon demonstrated consistent revenue growth and strength in key segments like women's health and biosimilars. However, the company faces significant challenges, including the loss of exclusivity for Atozet, pricing pressures, and substantial one-time costs. The company is actively implementing cost-saving measures to mitigate these challenges.
Highlights
Consistent Revenue Growth
Organon achieved $6.4 billion in revenue for 2024, marking a 3% growth rate at constant currency, maintaining three consecutive years of growth across all franchises.
Strong Performance in Women's Health
The women's health franchise grew 5% ex-exchange, led by Nexplanon, which increased 17% ex-FX, achieving its best annual performance ever.
Biosimilars Franchise Growth
Biosimilars saw a 12% growth at constant currency, driven by capturing more than the contractual share of the Brazil tender for Ontruzant.
Successful Vtama Launch
Organon launched Vtama with strong NRX growth of 51% over a 13-week average and plans to launch in Canada later in 2025.
Cost Efficiency Measures
Organon implemented initiatives expected to drive $200 million in operating savings for 2025, focusing on restructuring and streamlining operations.
Lowlights
Atozet Loss of Exclusivity
The loss of exclusivity for Atozet in Europe is expected to create a $200 million revenue headwind for 2025.
Pricing and Forex Challenges
Organon faces a $200 million impact from foreign exchange and a pricing headwind of approximately 2.7% for 2025.
Pressure on Biosimilar Pricing
Biosimilars, such as Renflexis, face pricing pressures, notably from the 340B program in the U.S.
Impact of One-Time Costs
Organon incurred $160 million in one-time spin-related costs in 2024 and expects $325 million to $375 million in restructuring and manufacturing separation costs in 2025.
Company Guidance
During Organon's Fourth Quarter and Full Year 2024 Earnings Call, the company provided detailed guidance for the upcoming year. For 2025, Organon forecasts revenue between $6.125 billion and $6.325 billion, factoring in an anticipated $200 million foreign currency headwind and a $200 million revenue impact from the loss of exclusivity (LOE) of Atozet in Europe. They expect the adjusted EBITDA margin to range from 31% to 32%, maintaining a 31% floor excluding in-process research and development (IPR&D). Key growth drivers include Nexplanon, projected to exceed $1 billion in revenue, and Vtama, which together with Emgality, is expected to contribute significantly to Organon's revenue growth. The company's strategic focus on operational efficiencies aims to achieve $200 million in cost savings, enhancing profitability despite the LOE challenges.

Organon Corporate Events

Business Operations and StrategyFinancial Disclosures
Organon Reports 2024 Financial Results and 2025 Outlook
Neutral
Feb 13, 2025

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.

Executive/Board ChangesBusiness Operations and Strategy
Organon Announces Cessation of Chief Commercial Officer Role
Neutral
Jan 21, 2025

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.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.