Pharmaceutical Giant Climbs Higher After Earnings Beat

The equity is down over 13% this year, however

Digital Content Manager
Oct 27, 2020 at 9:58 AM
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The shares of Merck & Co., Inc. (NYSE:MRK) are up 0.4% at $79.18 this morning, after the pharmaceutical giant reported third-quarter earnings of $1.74 per share, significantly higher than Wall Street's estimated $1.44 per share, and raised its annual forecast. The company attributed the positive results and 54.7% rise in profits to increased demand for lung cancer drug Keytruda and pneumonia vaccine Pneumovax 23, as countries across the world looked to avoid one respiratory disease on top of another during the COVID-19 pandemic.

The security has experienced its fair share of volatility over the last few months. Shares have been slowly climbing up the charts since dropping to a March 23, two-year low of $65.25. And while Merck stock has some ways to go before it reaches this year's pre-pandemic peak near the $92 mark, it is butting up against the formerly supportive 20-day moving average. Year-to-date, however, MRK is still down 13.3%. 

Despite such technical difficulties, analysts are optimistic toward the security, with 10 of the 14 in coverage sporting a "strong buy" rating, and the remaining four carrying a tepid "hold." Echoing this is the stock's 12-month consensus target price of $95.89, which is a whopping 21.6% premium to current levels.

The options pits reflect that upbeat analyst sentiment, with calls popular. MRK sports a 50-day call/put volume ratio of 3.98 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the high 84th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late. 

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