Organon & Co

Ticker
$OGN
Industry
Pharma
Type
Spin-off
Rating
Not Rated
Target Price
$46.00
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Spin-off from Merck in mid-2021. Organon consists of women’s health business, off-brand drug portfolio, and biosimilars. Women’s Health & Biosimilars are the growth businesses (growing mid-single-digits or higher) and the established brands are facing ~3% price erosion annually.

Notes

Spin-off from Merck ($MCK) in May 2021.
JP Morgan — estimates post 4Q21 — price target = $38 — this is an 8x EBITDA multiple at $36/share
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Financials & Valuation

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FY21 Valuation — Organon recently hit ~$39 per share which puts it at a $10bn market cap on 255m shares outstanding. They paid down a good amount of debt in 2021 so net debt is ~$8.3bn at yearend for an $18.3bn enterprise value.

Estimates are at $2.2bn in 2022 EBITDA and $5.47 EPS — 8.3x EBITDA and 7.2x PE.

Competitors trade at a pretty wide range of multiples depending on their individual circumstances but 8-10x EBITDA and 8-13x PE seem to be the norm.

  • At 9x EBITDA / 8.4x PE — OGN would be worth $46 per share (+18%)

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