Merck & Co., Inc. (NYSE:MRK) — This is one of the world’s largest drug manufacturers, and recent acquisitions have added to its position in niche markets. In January, Merck purchased Cubist Pharmaceuticals, which specializes in antibiotics that treat infectious diseases, primarily in hospital settings, for $9.5 billion. And in August, it acquired Idenix for $3.85 billion, gaining access to the company’s portfolio of hepatitis C drug candidates.
In addition, Merck completed the sale of its consumer care unit in October, which included the Claritin, Afrin and Coppertone brands, to Bayer AG (ADR) (OTCMKTS:BAYRY) for $14.2 billion.
S&P Capital IQ has a $64 price target on MRK stock. While its analysts expect revenue and earnings to decline this year, they are encouraged by the company’s focus on R&D geared toward new therapies in higher-growth areas like diabetes, oncology, vaccines, hepatitis C and acute care.
Management has authorized a $15 billion share buyback plan and pays an annual dividend of $1.80 per share for a current yield of 3.1%.
Technically, MRK stock has been trading in a rectangle that began in August. The pattern has support at $57 and resistance at $61.50. Within that zone are the 200-day moving average at $58.75 and the 50-day moving average at $59.73.
In the past five trading days, MRK stock triggered three buy signals from my proprietary indicator, the Collins-Bollinger-Reversal (CBR). The MACD indicator is also on the verge of issuing a buy.
Purchase MRK stock at the market for a trade to $65, which would result in an 11% gain. Investors who hold shares as a long-term investment in the pharmaceutical sector could see much higher profits.
