Merck Successes Create Buying Opportunity

Merck (MRK) is a very appealing investment for a long term defensive position. Current shareholders should hold and interested investors should initiate a position in October or near term. Merck offers an adequate dividend and its metrics are comparable to its peers. Merck is proactively offsetting key patent expirations as its diabetes division has experienced strong growth thus far and has the potential to be a long-term blockbuster patent. Merck is having successful trials with another diabetes drug while it’s focused on developing drugs for HIV, Alzheimer’s and expanding its portfolio in China as well. Merck is having continued success with its insomnia drug. Merck’s goals are also helped through investing in partnerships to bolster its pharmaceutical portfolio while divesting noncompetitive agreements. Current operations indicate that Merck is developing key patents that can position it to be the leader amongst the big pharmas for the long term.

Pfizer (PFE), Johnson & Johnson (JNJ), GlaxoSmithKline (GSK) and Novartis (NVS) are the major pharmaceuticals that are most comparable to Merck & Co. Pfizer’s and Johnson & Johnson’s price is around 22 times earnings, Merck & Co. is closer to 21 times earnings. Merck’s EPS is around $2.19, its EPS growth this year exceeds 639% – this EPS growth is the highest among these big pharmas. Merck’s 16.2% sales growth over the past five years is also the highest. Novartis’s 11% sales growth is the next highest.

Merck’s 2.1 current ratio is the highest among the firms – its debt-to-equity ratio is around 0.34. Merck’s ROE is 12.15%, its operating margin is 18.8% and its profit margin is 14.1%. To continue reading, click here.