Merck Enters Challenging Period – Analyst Blog
Posted on Thursday, February 5th, 2009 | In Stocks to WatchMerck & Co. Inc. (MRK) is a global research-driven pharmaceutical products company. Merck is entering a challenging period over the next few years. Revenues have stalled and will actually begin to decline in the next few years due to patent expirations and key late-stage pipeline failures.
Earnings should decline in 2009 due to the stalled topline and a higher tax rate. Still, Merck is dramatically cutting costs and buying back shares. This should allow management to deliver positive EPS growth in 2010.
In the meantime, we do not see the shares outperforming until investors get more clarity on what will drive the topline over the next few years. We also fear that Merck may follow its U.S. rival Pfizer (PFE) and attempt a massive acquisition. This keeps us on the sideline. We see $34 as fair value.
Jason Napodano, CFA, contributed to the report.
Read the full analyst report on MRK
Read the full analyst report on PFE
“MRK” Free Stock Analysis: Buy? Sell? Hold?
“PFE” Free Stock Analysis: Buy? Sell? Hold?
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