CFO stock purchases can be extremely informative insider transactions. CFOs have considerable insights into their firms’ financial activities and some studies have found that these insiders earn higher profits following their purchases of company shares than CEOs.
In this report, we are going to highlight a large CFO purchase at Merck KGAA (MRK:GR). Merck is a science and technology company that operates in three main areas: healthcare, life science, and electronics. In all three sectors, it offers specialized, high-quality products. The company is listed on Deutsche Börse’s Xetra and currently has a market capitalization of €23.8 billion.
Merck: Insider Buying
Our data shows that on 24 September, Merck’s CFO Marcus Kuhnert bought 1,000 MRK shares at a price of €199.32 per share. This trade cost the insider €199,320.
First Insider Trade in 2021
This trade caught our attention due to the fact that insider transactions at Merck are not very common. Indeed, our records show that this is the first trade all year. This would suggest that Mr. Kuhnert sees value in the stock at present.
It’s worth noting that Mr. Kuhnert has considerable company and industry experience. He has served as CFO of Merck since August 2014. Before joining Merck, he worked for Henkel AG & Co. KGaA and was CFO of the Laundry & Home Care business unit. So, he is likely to have a good understanding of the company’s future prospects.
Full-year Guidance Raised
Merck’s recent Q2 results were strong.
Reported group net sales increased by 18.2% to €4.9 billion while EBITDA pre was up 46.7% to €1.6 billion. EPS pre was up 72.3% to €2.24 while operating cash flow increased by 76.9% to €888 million.
On the back of these results, the group raised its forecast for fiscal 2021. It now expects group net sales to grow by 12%-14% on an organic basis (versus previous guidance of 10%-12%) and adjusted EBITDA to rise by 21%-25% (versus previous guidance of 16%-20%).
“We have succeeded in mobilizing for accelerated, efficient growth in all business sectors," said CEO Belen Garijo. "We are poised to deliver sustainable growth due to our optimal position to address all Covid and post-Covid macro trends,” she added.
In light of these strong results and the upgrade to guidance, we see the insider buying here as a bullish indicator.