Value
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 9.9 |
| EV/EBITDA | 7.7 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 3.7x
- ▸PEG: 0.06
- ▸Attractively valued
OGN · Why this verdict
Why Organon & (OGN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Organon derives 74% of revenue from outside the United States and 59% from established brands, creating meaningful concentration risk that limits pricing power and exposes earnings to currency and generic-competition headwinds. Bear case | Concentration risk diminishes if revenue from non-Established-Brands segments grows to represent more than 45% of sales within 12 months. | →Stable |
| CounterGeographic diversification can be a stabilizer in domestic downturns, and established brand revenues may be more predictable than new product lines. | ||
With a forward P/E of 3.7x and a PEG ratio of 0.06, Organon trades at a substantial discount relative to its earnings power, suggesting the market has priced in significant pessimism that may be excessive. Valuation breakdown | The stock re-rates toward a forward P/E above 6x over 12 months as earnings stability is demonstrated. | →Stable |
| CounterThe deep discount may reflect structurally declining revenue and a business with two earnings misses in the last four quarters, making multiple expansion unlikely without a growth catalyst. | ||
Free cash flow conversion of 215% relative to net income reflects high-quality earnings and a business generating substantial cash despite topline pressures, supporting the dividend and debt service. Quality breakdown | Free cash flow remains above 150% of net income over the next four reported quarters, validating cash generation quality. | →Stable |
| CounterRevenue declining at 4% annually could eventually compress cash flow if cost cuts have already been exhausted, making the high conversion ratio unsustainable. | ||
Organon has missed earnings estimates in 2 of the last 4 quarters with an average surprise of -3.8%, signaling that management guidance and analyst models may not fully reflect the pressure on the business. Earnings | Earnings surprise turns positive in at least 3 of the next 4 quarters, indicating guidance has been reset to a beatable level. | →Stable |
| CounterTwo of the four recent quarters were beats, suggesting the miss pattern is not yet a confirmed trend, and the Q3 2025 beat of +8.5% shows the business can outperform when conditions allow. | ||
Organon derives 74% of revenue from outside the United States and 59% from established brands, creating meaningful concentration risk that limits pricing power and exposes earnings to currency and generic-competition headwinds.
→StableBear case
- Expectation
- Concentration risk diminishes if revenue from non-Established-Brands segments grows to represent more than 45% of sales within 12 months.
CounterGeographic diversification can be a stabilizer in domestic downturns, and established brand revenues may be more predictable than new product lines.
With a forward P/E of 3.7x and a PEG ratio of 0.06, Organon trades at a substantial discount relative to its earnings power, suggesting the market has priced in significant pessimism that may be excessive.
→StableValuation breakdown
- Expectation
- The stock re-rates toward a forward P/E above 6x over 12 months as earnings stability is demonstrated.
CounterThe deep discount may reflect structurally declining revenue and a business with two earnings misses in the last four quarters, making multiple expansion unlikely without a growth catalyst.
Free cash flow conversion of 215% relative to net income reflects high-quality earnings and a business generating substantial cash despite topline pressures, supporting the dividend and debt service.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 150% of net income over the next four reported quarters, validating cash generation quality.
CounterRevenue declining at 4% annually could eventually compress cash flow if cost cuts have already been exhausted, making the high conversion ratio unsustainable.
Organon has missed earnings estimates in 2 of the last 4 quarters with an average surprise of -3.8%, signaling that management guidance and analyst models may not fully reflect the pressure on the business.
→StableEarnings
- Expectation
- Earnings surprise turns positive in at least 3 of the next 4 quarters, indicating guidance has been reset to a beatable level.
CounterTwo of the four recent quarters were beats, suggesting the miss pattern is not yet a confirmed trend, and the Q3 2025 beat of +8.5% shows the business can outperform when conditions allow.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Organon carries an attractive valuation with a forward P/E of 3.7x and a PEG of 0.06, supported by strong free cash flow generation at 215% of net income, though revenue is declining 4% and the risk/reward is currently unfavorable with the price already above its resistance-based take-profit target.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 3.9 |
| Gross margin | 6.8 |
| Op margin | 7.5 |
| Net margin | 2.0 |
| Current ratio | 6.9 |
| FCF quality | 10.0 |
| Moat | 5.8 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 34%
- ▸Excellent cash conversion: 215% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.6 |
| EPS growth | 10.0 |
- ▸Declining revenue: -4%
Momentum
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 3.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 2.7 |
| erm sentiment | 3.8 |
- ▸Below analyst target
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.4 |
| quality rank | 2.3 |
| growth rank | 0.6 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.7 |
| support resistance | 2.1 |
| 52w position | 9.9 |
Risk (lower is worse)
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.9 |
| days to cover | 3.4 |
| volatility | 10.0 |
| put call | 9.7 |
| implied vol | 6.9 |
| max pain risk | 3.0 |
| beta | 4.9 |
| debt equity | 0.0 |
- ▸Above max pain $6
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.6 |
| dividend safety | 6.0 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend: 59.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:29d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.8<4.5
- ASYMMETRY:-2.0=NEGATIVE
Warning (0)
none
Reward-to-Risk
-1.96
Upside
-29.4%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.54>1.3, MCap $3.6B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.8<4.5, ASYMMETRY:-2.0=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.96 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.0, Quality at 6.7, and Growth at 5.8; the weakest are Catalyst at 3.7, Momentum at 3.8, and Sentiment at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.96 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Deep Value Low Pe
Trip ifForward P/E falls below 3x for 2 consecutive quarters, signaling further earnings deterioration beyond current estimates.
- P2Fcf Conversion Strength
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive quarters.
- P3Geographic Product Concentration
Trip ifRevenue from outside the United States rises above 78% of total sales, indicating concentration risk is increasing rather than decreasing.
- P4Earnings Consistency Risk
Trip ifEPS surprise falls below -10% in at least 3 of the next 4 quarters, confirming a structural guidance credibility problem.