Wall Street Firm Believes Risks are Priced into Merck Shares (MRK)

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Investment firm Leerink Swann is out with a note this morning, saying Merck’s (MRK) near-term risks have already been priced in.

The company suggests another possible leg down for Zetia/Vytorin in the U.S, but believes the current valuation already implies the loss of more than 50% of the cholesterol franchise, 100% of U.S. Temodar sales, and up to 30% of Remicade/ Simponi profits. The firm believes there is a good chance of a favorable settlement with JNJ and that Merial/Intervet FTC overlap may be overestimated and cost synergies underestimated. These catalysts, as well as MRK’s substantial late-stage pipeline, is reason for a bullish outlook for Merck shares.

The Bottom Line
We had removed the stock from our “recommended” list last July 21, when shares traded at $35.33. The company has a dividend yield of 4.66%, based on Friday’s closing stock price of $32.59. The company has technical support in the $28 price area. If the stock can firm up, we see overhead resistance around the $33-$35 price levels. We would remain on the sidelines for now.

xxx is not recommended at this time, holding a Dividend.com DARS™ Rating of 0.0 out of 5 stars.

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