Merck Stock Middling After $425 Million Buyout

The stock has been contained by its 30- and 60-day moving averages of late

Digital Content Manager
Nov 23, 2020 at 11:24 AM
    facebook twitter linkedin

    Blue-chip pharmaceutical maker Merck & Co., Inc (NYSE:MRK) is struggling to gain traction this morning, down 0.3% at $80.24, following an announcement that it would acquire OncoImmune in a $425 million all-cash deal. OncoImmune just released positive interim data for a phase 3 trial of its leading COVID-19 candidate, CD24F, intended for patients with severe and critical cases. Merck wants to develop the manufacturing capacity to produce this treatment at scale -- a plan that could take several months. 

    The shares of Merck have been middling on the charts, with an early November attempt  at a breakout snuffed out by the $85 level. In fact, since this rejection, the equity has been contained by its 60- and 30-day moving averages, which have kept it at an 11.6% deficit for the year. 

    Despite this lukewarm price action, analysts are still on board, with 11 calling the Dow component a "strong buy," while just four say "hold." Plus, the 12-month consensus price target of $95.58 is a 19.2% premium to current levels. 

    Meanwhile, short sellers have been piling on. Short interest shot up 40.1% in the last reporting period, yet still makes up a slim 0.6% of MRK's available float. Options traders have maintained a bit more optimism. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MRK sports a 50-day call/put volume ratio of 3.46, which stands higher than 66% of readings from the past year. This suggests calls are being picked up at a relatively quicker pace, compared to puts. 



    Stop leaving money on the table with the same old broken options trading approach...

    There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

    Schaeffer's Daily Bulletin Offer


    Special Offers from Schaeffer's Trading Partners