Organon, which was spun out from Merck in 2021, has a portfolio of more than 60 medicines across a range of therapeutic areas, led by its established products division. Featured are such drugs as asthma medication Singulair and cholesterol drug Azotet, which accounts for two-thirds of its $6.3 billion in revenues. This is supported by its women’s health division (25% of revenues) and its biosimilars division. Its range of products produce strong cash flows that support innovation and future growth opportunities. It employs 10,000 people and is headquartered in Jersey City, NJ.
Income Investor
The abrupt and enormous reduction in Organon’s dividend so soon after its management appeared to have committed themselves to maintaining it means that its credibility is gone. The equivalent yield is now less than 1% even after the price has halved, making it unsuitable as an income investment. Sell now for a 47% loss before taking income of 13% into account, for a negative total return of 33%. -Gavin Graham
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OGN was first recommended here on November 10, 2023