Merck: 7 Different Insiders Have Sold Shares This Month

Feb.16.14 | About: Merck & (MRK)

In this article, I will feature one healthcare stock that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Merck & Co. (NYSE:MRK) provides various health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products worldwide.

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Insider selling during the last 30 days

Here is a table of Merck's insider-trading activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Bridgette Heller EVP Feb 13 43,870 No 27,586 shares + 24,877 options 45.5%
Adam Schechter EVP Feb 11 18,000 No 70,507 shares 20.3%
Kenneth Frazier CEO Feb 11 41,520 No 266,274 shares 13.5%
John Canan SVP Feb 11 10,000 No 14,041 shares 41.6%
Willie Deese EVP Feb 10 50,000 No 106,723 shares 31.9%
Peter Wendell Director Feb 10 5,000 No 1,000 shares 83.3%
Wendell Weeks Director Feb 10 5,000 No 200 shares 96.2%
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There have been 173,390 shares sold by insiders during the last 30 days.

Insider selling by calendar month

Here is a table of Merck's insider-trading activity by calendar month.

Month Insider selling / shares Insider buying / shares
February 2014 173,390 0
January 2014 0 0
December 2013 0 0
November 2013 0 0
October 2013 500 0
September 2013 0 0
August 2013 50,638 0
July 2013 0 0
June 2013 0 0
May 2013 380,346 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 604,874 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Merck reported the full-year 2013 financial results on February 5 with the following highlights:

Revenue $44.0 billion
GAAP net income $4.4 billion
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MRK Revenue (<a href=

Merck's revenues peaked in 2012.

Outlook

Merck's 2014 guidance is as follows:

Revenue $42.4-$43.2 billion
GAAP EPS $2.15-$2.47
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Pipeline

Merck's pipeline as of October 31, 2013 consisted of the following.

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(Source: Merck)

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(Source: Merck)

Competition

Merck's competitors include GlaxoSmithKline (NYSE:GSK), Novartis AG (NYSE:NVS), and Pfizer (NYSE:PFE). Here is a table comparing these companies.

Company MRK GSK NVS PFE
Market Cap: 161.87B 133.81B 200.71B 206.79B
Employees: 77,300 N/A 135,696 N/A
Qtrly Rev Growth (yoy): -0.04 0.02 0.02 N/A
Revenue: 44.03B 42.60B 58.83B 51.58B
Gross Margin: 0.64 0.70 0.67 0.82
EBITDA: 15.93B 13.45B 16.20B 23.11B
Operating Margin: 0.21 0.26 0.19 0.33
Net Income: 4.40B 8.74B 9.18B 11.34B
EPS: 1.47 3.55 3.70 3.20
P/E: 37.67 15.72 22.36 9.97
PEG (5 yr expected): 8.99 2.07 3.02 6.63
P/S: 3.66 3.10 3.39 3.98
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Merck has the second-highest P/S ratio among these four companies.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
GSK N/A N/A
NVS N/A N/A
PFE 0 160,000
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Only Merck has seen intensive insider selling during the last 30 days.

Conclusion

There have been seven different insiders selling Merck, and there have not been any insiders buying Merck during the last 30 days. All seven of these insiders decreased their holdings by more than 10%. Merck has an insider ownership of 0.03%.

Before going short Merck, I would like to get a bearish confirmation from the Point and Figure chart. The two main reasons for the proposed short entry are negative revenue growth, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.