We spoke with Investor Relations ahead of the company''s 1Q results scheduled for May-15th. No changes in guidance were given and this report should be read as our interpretation of the discussion, Rx and FX trends rather than specific company commentary. BNPP Exane View A combination of seasonality, NIH funding concerns (10% of SLS and c.5% Life Science), and the impact of delayed capex from key semi customers (DSS 25% of Semiconductor solutions) is likely to see Q1 business trends come in at the lower end of the guidance ranges given for 2025. Ramp up costs and phasing are also likely to weigh on the Q1 Life Science EBITDA margin. FX trends are essentially neutral for Q1, according to our model, though significantly negative for the remainder of FY25 (-3-4% versus current guidance of -2% to +1%). For more details see our recent sector report Pharma Drama; where do we have conviction? and MRCG initiation report Spring is in the air but conglomerate discount set to remain. Investment tweet We rate Merck KGaA at Underperform with a EUR107 PT based on a blended PE and DCF/SOTP valuation. The Life Science/Semis recovery story will be questioned in light of market turmoil and we argue consensus remains optimistic. We view internal pipeline prospects as anaemic, though like the SpringWorks deal based on our physician due diligence. We have higher conviction elsewhere. 2025-30e revenue/EPS CAGR of 4/5% versus EU Pharma on 12x offering 6/9% CAGR. Our PE-based valuation is EUR91 based on a 10x 2026 PE; a 20% sector discount reflecting growing pressure on key growth drivers (Erbitux/Bavencio/Mavenclad) and poor pipeline prospects. Our DCF (WACC 8.3%, g 1%) and SOTP valuations are EUR118 and EUR135, with the latter assuming a 10% conglomerate discount. At the announced acquisition value of $47/share (EUR3.5bn) our pro-forma analysis points to EPS accretion of 0-16% from 2027e, a ROIC WACC from 2029e and a NPV uplift of EUR14/share.