Merck: The Market Lacks Conviction To Take It Higher

Jul. 09, 2023 12:19 AM ETMerck & Co., Inc. (MRK) StockMRK26 Comments

Summary

  • Merck's recent $10.8B acquisition of Prometheus Biosciences is expected to negatively impact earnings per share by approximately $0.25 in the first 12 months.
  • Despite a projected 6.5% YoY decline in adjusted EPS, Merck's earnings growth is not expected to be structurally affected, with positive growth expected in FY24.
  • MRK's expensive valuation could discourage buyers from having the confidence in taking it higher, as MRK sold off after it took out its all-time highs in May.
  • MRK also trades well above its pharma peers' median, suggesting that optimism over its earnings growth could have been reflected in its current valuation.
  • I don't see any particularly enticing opportunity to buy MRK at the current levels.
  • I do much more than just articles at Ultimate Growth Investing: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Merck & Co. headquarters in Silicon Valley

Sundry Photography

Investors of Biopharma leader Merck & Co., Inc. (NYSE:MRK) didn't cheer the completion of its recent $10.8B acquisition of Prometheus Biosciences, which I first discussed in April. MRK has remained close to the lows in June, as its premium

A Unique Price Action-based Growth Investing Service

  • We believe price action is a leading indicator. 
  • We called the TSLA top in late 2021.
  • We then picked TSLA's bottom in December 2022.
  • We updated members that the NASDAQ had long-term bearish price action signals in November 2021.
  • We told members that the S&P 500 likely bottomed in October 2022.
  • Members navigated the turning points of the market confidently in our service.
  • Members tuned out the noise in the financial media and focused on what really matters: Price Action.

Sign up now for a Risk-Free 14-Day free trial!

This article was written by

42.05K Followers

JR Research is an opportunistic investor. He was recognized by TipRanks as a Top Analyst. He was also recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP.

He identifies attractive risk/reward opportunities supported by robust price action to potentially generate alpha well above the S&P 500. He has also demonstrated outperformance with his picks.

He focuses on identifying growth investing opportunities that present the most attractive risk/reward upside potential. His approach combines sharp price action analysis with fundamentals investing.

He tends to avoid overhyped and overvalued stocks while capitalizing on battered stocks with significant upside recovery possibilities.

He runs the investing group Ultimate Growth Investing which specializes in identifying high-potential opportunities across various sectors. He focuses on ideas that has strong growth potential and well-beaten contrarian plays, with an 18 to 24 month outlook for the thesis to play out.

The group is designed for investors seeking to capitalize on growth stocks with robust fundamentals, buying momentum, and turnaround plays at highly attractive valuations.

Learn more

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

About MRK Stock

SymbolLast Price% Chg
Market Cap
PE
Yield
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on MRK

Related Stocks

SymbolLast Price% Chg
MRK
--