Blue-Chip Drugmaker Falls on Newest Covid Treatment Data

MRK is falling even lower from this month's record high

Assistant Editor
Nov 26, 2021 at 10:13 AM
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Though most Covid-19 treatment stocks are surging this morning, following news of a new Covid-19 variant, pharmaceutical giant Merck & Co., Inc. (NYSE:MRK) is down 4.3% to trade at $78.76 at last check. The blue-chip name reported updated data from late-stage study of its experimental Covid-19 pill, which showed a lower efficacy rate in reducing risk of hospitalization and deaths than was seen in an earlier study, with a 30% reduction compared to its previous 50%. 

After a bear gap following its recent Nov. 4 record high of $91.40, MRK has been struggling to break past the $84 area. Now back at its lowest level since mid October, the 150-day moving average still lingers just below as potential support. It's worth noting, however, that the stock could be due for a short-term bounce after all of this negative price action, per its Relative Strength Index (RSI) of 27, which sits in "oversold" territory. 

Analysts are split on MRK, with seven of the 13 in coverage carrying a "strong buy" rating, and six a tepid "hold." Meanwhile, the 12-month consensus price target of $96.17 is a 21.6% premium to last night's close. 

Over in the options pits, calls have been more popular than usual during the past 10 weeks. Merck stock's 50-day call/put volume ratio of 5.59 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 84% of readings from the past year. 

Today, though calls are still winning out on an absolute basis, put volume is running at double what's typically seen at this point. The December 100 and 80 calls are the most active so far today, followed by the weekly 11/26 78-strike put, which expires at the end of the day, and where new positions are being bought to open. 

 

 

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