Citigroup Reiterates Buy Rating on Merck (MRK)

Citigroup is out with a research report this morning, where it reiterates its Buy rating on Merck MRK; it has a $45.00 price target on the stock. The Citi analysts said MRK's stock is likely to remain range-bound for the remainder of 2010, as the overhang from the Johnson & Johnson JNJ arbitration is not expected to be resolved until early 2011. They added that resolution of the arbitration, completion of the Merial-Intervet SP merger, and pipeline news flow are expected to place upward pressure on MRK's multiple. As for valuation, the analysts remarked, “We decreased our 2010 vaccine sales to $3.5B(-$60M); infectious diseases to $4.1B(-$100M), & removed Subutex from our estimates. These declines were partially offset by more robust sales of Singulair(+$100M). We decreased gross margin by 40bp to 75.5% to account for the 3Q10 miss. We lowered R&D as % of sales by 10bp to 18.0% & maintained SG&A at 27.4%. Our 22% tax rate is unchanged, but lowered share count by 9M.”
Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorPrice TargetAnalyst RatingsCitigroup
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!