At a glance
Overall, the development of the stock markets in 2016 was subdued. Following weak performance in the first three quarters, share prices only started to pick up more noticeably towards the end of the year. By contrast, our share price rose nearly 11% over the entire period, finishing the year at € 99.15. Merck shares thus again outperformed all the relevant comparative indices in 2016: The performance of Merck shares was nearly 4 percentage points stronger than thatof the DAX®and almost 7 percentage points better than the relevant chemical industry index. Even more pronounced was the difference to the relevant pharmaceutical index, which our shares outperformed by nearly 23 percentage points.
In a generally weak market in the first quarter, Merck shares hit their annual low of € 71.40 on February 11, 2016. At the end of 2015, concerns about macroeconomic activity had already resurfaced in the markets. These related mainly to economic developments in China and in emerging markets as well as to the perceptible oil price decline. Moreover, our report on the full-year results of 2015, which included first qualitative indications of expected sales and earnings performance in 2016, triggered cautious reactions by some market participants with regard to our future earnings potential.
However, in the course of the following months, our share price recovered noticeably, both in absolute terms and relative to the relevant comparative indices. Among other things, the presentation of a succession of good quarterly results that were either in line with or above market expectations, along with steady, consecutive upgrades of the guidance on our business performance in 2016, most likely helped to ease the initial concerns of some market participants.
Additionally, in early June 2016, we presented clinical data on our key pipeline compound avelumab at both the important pharmaceutical ASCO meeting (American Society of Clinical Oncology) in Chicago, Illinois (USA) and during a conference call. This update was received positively by investors and analysts. The referendum in the United Kingdom concerning the country’s exit from the European Union led to noticeable share price corrections in the financial markets. However, Merck shares largely remained unaffected by this development owing to the company’s broad geographic positioning and limited dependence on this market. The situation was similar as of mid-August 2016, when share prices, specifically in the pharmaceutical sector, began to weaken noticeably. Among other things, this was due to increasing uncertainty among market participants over potentially significant changes in the United States, the world’s largest pharmaceutical market, in the run-up to the presidential elections. Another important reason was disappointing clinical data presented by a competitor in the field of immuno-oncology. However, our share price only reflected this to an insignificant extent and even marked its annual high of € 100.05 on August 11, 2016. Instead, positive economic data and a significant recovery in oil prices led to a share price pick-up in the broader stock market, which also benefited Merck shares. Merck’s broad positioning and limited dependence on a single industry were most likely the key reasons for this assessment by market participants. Our Capital Market Day on October 13, 2016 also resonated very well with investors and analysts, who, as in 2015, had the opportunity to meet members of the management of all our business sectors and to engage in an in-depth dialogue with them. The good development of the Merck share price in the summer saw further acceleration towards the end of the year with the announcement of good third-quarter results, the partly unexpected outcome of the U.S. presidential elections in November 2016 as well as the development of the euro / U.S. dollar exchange rate, which showed a favorable trend for European companies. Merck shares closed at € 99.15, which was close to their annual high reached in August 2016.
In addition to the discussions at Capital Market Day in October 2016 and the conference call on our research and development pipeline in June 2016, members of Merck’s executive management and IR team held in-depth briefings with more than 700 investors and analysts worldwide in 2016. These took place within the scope of investor conferences, roadshows and conference calls. In April 2016, the Merck Investor Relations team achieved first place in the prestigious “All-Europe Executive 2016 Ranking” by Institutional Investor Magazine in the category “Best Investor Relations Program – Nominated by the Sell Side” in the pharmaceutical sector (third place in 2015). More than 700 portfolio managers and 900 sell-side analysts took part in the survey, rating important criteria such as credibility, competence, expertise and objectivity in communication with financial market participants as well as reaction speed as regards future developments within the company or in response to inquiries.
The average daily trading volume of our shares decreased by around 18% from approximately 563,000 in 2015 to roughly 464,000 in 2016. The North America region again dominated the free float in 2016, yet its proportion decreased to around 31% in comparison with the previous year (2015: 38%). By investor type, GARP (growth at reasonable price) and value-oriented investors dominated, as in the previous year. However in 2016, growing interest could be seen among growth-oriented investors, who meanwhile hold nearly 30% of the free float. At the end of 2016, the top five investors held around 18% of the free float (2015: 19%).
Share price development from January 1, 2016 to December 31, 2016
Key share price data 1
|Share price high||€||100.05||111.25|
|Share price low||€||71.40||74.90|
|Year-end share price||€||99.15||89.57|
|Daily average number of Merck shares traded 2||units||468,408||563,370|
|Market capitalization 3 (at year-end)||€ million||43,108||38,943|
|Market value of authorized shares 4 (at year-end)||€ million||12,814||11,576|