Merck Upgraded to “Buy” at Jefferies on Valuation (MRK)


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Drugmaker Merck & Co., Inc. ( MRK ) on Tuesday caught an upgrade from analysts at Jefferies & Co., who cited the company's solid balance sheet and cash flow.

The firm said it boosted its rating on MRK from "Hold" to "Buy" but lowered its price target to $37, still suggesting a nearly 24% upside to the stock's Monday closing price of $29.94.

The firm also lowered its EPS estimates slightly through 2012, but said that "Much like with Pfizer ( PFE ) during 2010, we see that many commentators do not apply good balance sheet and cash flow modelling to their Merck Models. Based on recent commentary from the company we feel assured that capital will be deployed to produce significant earnings surprise over our forecast period. We see the recent weakness as an excellent opportunity to buy the shares."

Merck shares rose 13 cents, or +0.4%, in premarket trading Tuesday.

The Bottom Line
Shares of Merck ( MRK ) have a 5.08% dividend yield, based on last night's closing stock price of $29.94. The stock has technical support in the $26-$28 price area. If the shares can firm up, we see overhead resistance around the $32-$35 price levels.

Merck & Co., Inc. ( MRK ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Stocks

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