Organon & Co: Cost Takeout Catalysts, Initiate Strong Buy

Summary

• Initiate Strong Buy on Organon & Co. with $26.4 PT, driven by cost savings, Nexplanon momentum, and biosimilars diversification offsetting Established Brands LOE.
• Forecasted EPS of $4.00 (FY25; +20.1% Y/Y) and $4.40 (FY26; +10.0%), well above consensus, supported by operational leverage and dividend cut for deleveraging.
• Transformational cost savings of >$200M by FY25 and $275M by FY26, driving margin expansion and multi-year EPS acceleration.
• Risks include execution of cost savings, biosimilars pricing pressures, and U.S. reimbursement policy, but current valuation offers attractive asymmetry for patient investors.