Merck Stock Middling After $425 Million Buyout

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

Deputy Editor
Nov 23, 2020 at 11:24 AM
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    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. 

     

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