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Behind Merck’s Performance in 3Q17


Oct. 17 2017, Published 3:57 p.m. ET

A look at Merck

Headquartered in New Jersey, Merck (MRK) is one of the oldest and largest pharmaceutical companies by revenue. Merck does business as Merck Sharp & Dohme outside of US and Canadian markets. Merck’s portfolio includes products for human health and animal health.

MRK stock rose ~0.6% in 3Q17 and has risen ~7.7% YTD (year-to-date) as of October 16.

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Analysts’ recommendations

Wall Street analysts estimate that MRK stock has the potential to return ~9.8% over the next 12 months. These recommendations show a 12-month target price of $69.60 per share, compared with $63.39 on October 13.

Of the 21 analysts tracking MRK stock, 13 recommend a “buy,” while seven recommend a “hold,” and one recommends a “sell.” The consensus rating for the stock stands at 2.33, which represents a moderate “buy” for long-term growth investors.

Analysts’ revenue estimates

Merck’s revenues have been driven by the strong sales of Gardasil, Keytruda, and Proquad-Varivax in its human health portfolio, in addition to a few products in its animal health portfolio.

Wall Street analysts estimate that MRK will see revenues of ~$10.5 billion in 3Q17, which would be nearly flat compared with 3Q16, and earnings per share of $1.03.

To divest company-specific risks, investors can consider ETFs like the VanEck Vectors Pharmaceutical ETF (PPH), which has 5.0% of its total assets in Merck (MRK). PPH also has 5.6% in Novo Nordisk (NVO), 6.2% in AbbVie. (ABBV), and 4.7% in AstraZeneca (AZN).


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