Blue-Chip Pharma Stock Pops on Earnings, Revenue Beat

Options bulls are blasting Merck stock

Digital Content Manager
Oct 28, 2021 at 10:53 AM
facebook twitter linkedin

Pharmaceutical giant Merck & Co., Inc. (NYSE:MRK) is up 4.2% to trade at $84.99 at last check, after the blue-chip concern posted a third-quarter earnings and revenue beat. The company attributed the strong results to cancer drug Keytruda's 22% sales growth, while cervical cancer vaccine Gardasil also beat estimates. In response, Merck raised and narrowed its 2021 profit forecast, adding its experimental Covid-19 drug could bring in between $5 and $7 billion in sales through the end of next year.

On the charts, the equity surged to an annual high of $85.60 earlier. The shares have experienced some volatility over the past year, but have been chopping higher since bouncing off the 80-day moving average earlier this month. Year-over-year, MRK is up 16.9%.

The brokerage bunch is relatively split towards Merck stock, indicating there is plenty of room for upgrades going forward. Of the 13 analysts in coverage, seven carry a "strong buy" rating, while six still say "hold." Meanwhile, the 12-month consensus target price of $93.88 is a 10.6% premium to current levels.

The options pits are firmly in the bullish camp. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MRK's 50-day call/put volume ratio of 5.22 stands higher than 88% of readings from the last year. This means long calls have been getting picked up at a much quicker-than-usual pace.

Drilling down to today's options activity, 48,000 calls have exchanged hands so far, which is double the intraday average. Most popular is the weekly 10/29 85-strike call, where new positions are being opened, followed by the January 2022 87.50-strike call, where LEAPS activity is suspected.


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!