Merck (MRK) stock forecast: can Covid-19 pill help it rebound?
The stock of New Jersey-based pharmaceutical company Merck & Co, traded on the New York Stock Exchange (NYSE) under the ticker symbol MRK, had a bumpy performance throughout 2021.
Several tailwinds such as the firm’s acquisition of publicly traded biopharmaceutical company Acceleron Pharma in September 2021, and the US Food and Drug Administration’s (FDA) approval of the company’s anti-PD-1 therapy for renal cell carcinoma, Keytruda, in November 2021 boosted the stock’s performance. However, headwinds such as the lower effectiveness of its oral antiviral Covid-19 drug molnupiravir, announced in November 2021, brought the stock down.
Let’s take a look at the stock’s overall performance in 2021 and consider which factors may help one formulate an apt Merck share price forecast.
Stock analysis: Merck’s performance in 2021
The stock of Merck & Co fell nearly 2% in the entirety of 2021. The stock had closed at $77.14 on 30 December 2021, declining from its 4 January 2021 closing price of $77.25. The company had a market capitalisation of $198.43bn (£146.86bn) as of 7 February, according to CompaniesMarketCap.
As of 7 February, the stock was trading above its 200-day moving average at $77.37, which could provide an optimistic outlook for the stock’s price movement ahead.
Fundamental analysis: 2021 earnings and 2022 financial outlook
Merck’s revenue surged 24% to $13.521bn in the fourth quarter ended December 2021 from $10.948bn a year earlier. The firm swung to generally accepted accounting principles (GAAP) diluted earnings per share (EPS) of $1.51 from loss per share of $1.03 during the same period, the company reported on 3 February.
For the year ended 31 December 2021, the pharmaceutical company’s sales increased 17% to $48.704bn from $41.518bn a year earlier. Merck’s GAAP diluted EPS rose to $4.86 from $1.78 during the same period.
GAAP net income during Q4 2021 stood at $3.82bn, swinging from a net loss of $2.617bn in the year-ago period. For the entire year, GAAP net income surged to $12.345bn from $4.519bn.
The GAAP EPS for the fourth-quarter and full-year 2021 are indicative of solid underlying business performance, along with the favourable impacts of molnupiravir, an investigational oral antiviral Covid-19 treatment, and effective tax rates.
Commenting on the company’s growth in Q4 2021 and the entire year, Merck’s CEO and president Robert M Davis said:
Looking ahead, Merck’s full-year 2022 revenue is expected to be within $56.1bn and $57.6bn, taking into account a negative impact from foreign exchange of nearly 2% at mid-January exchange rates. The entire year 2022 GAAP EPS is anticipated to be between $5.76 and $5.91.
Let us now take a look at what some key technical indicators indicate of the MRK stock’s vitals.
Technical analysis: technical indicators
The RSI of a stock lies between zero and 100. An RSI reading of more than 70 is considered ‘overbought’; it is considered ‘oversold’ or ‘undervalued’ when below 30.
The stock’s commodity channel index (CCI) (20) considers the security a ‘neutral’ based on a reading of -147.29. The CCI is a momentum-based oscillator that weighs the current mean price against the average mean price over 20 periods. A reading of negative to near zero to over 100 may indicate an upward tendency in the stock’s price.
However, taking a look at the stock’s moving average convergence divergence (MACD) level (12, 26), one finds that the indicator points to ‘sell’ based on a reading of 0.46, as per the TradingView data.
The MACD is a momentum indicator where the reading is obtained by deducting the 26-period exponential moving average (EMA) from the 12-period EMA.
Can Merck’s Covid-19 pill help the stock rebound?
There has been much speculation around molnupiravir, which Merck is developing with privately held Ridgeback Biotherapeutics. The drug has been authorised for use in more than 10 countries, including in the US, UK and Japan.
The company’s 28 January news release stated that the drug had been found effective against the SARS-CoV-2 variant Omicron in vitro. Researchers conducted the in vitro studies independently from institutions in six countries, including Belgium, Czech Republic, Germany, Poland, the Netherlands and the US.
This new finding could put the drug in focus as a crucial treatment option for adults with mild to moderate Covid-19, given Omicron is the primary variant of new infections worldwide at present.
The company expects to ship more than 4 million courses of the drug to over 25 countries over the next few days. Out of this, 3 million courses will be sent to the US government alone, under its procurement agreement.
The therapy has also cleared several regulatory milestones, which elevate the importance of the drug for usage in Omicron cases. The FDA has given the drug an emergency use authorisation to treat mild to moderate Covid-19 in adults, Japan’s Ministry of Health, Labour and Welfare (MHLW) gave the drug a special approval for emergency, and the UK Medicines and Healthcare products Regulatory Agency approved the drug for usage in Covid-19 patients with mild to moderate infection.
Given these regulatory approvals, Merck could be looking at considerable revenue generated from the sale of the drug ahead. This prospective scenario therefore makes it possible that the company’s new drug molnupiravir may ramp up the MRK stock performance ahead.
Let us now take into account analysts’ ratings and sentiment for the Merck stock, along with the Merck stock prediction.
Merck stock outlook: analysts’ sentiments
According to MarketBeat, there are several Merck stock projections by different analysts, which may be helpful to decide whether the Merck stock is a buy, sell, or hold. The consensus rating was ‘buy’ based on 16 analyst views as of 4 February 2022.
Out of the 16 analysts covering the stock, one rated it as a ‘strong buy’, eight rated it as a ‘buy’, while the remaining seven rated it a ‘hold’. These analysts derived from JPMorgan Chase & Co, Mizuho, The Goldman Sachs Group, UBS Group, Wells Fargo & Company, and Morgan Stanley.
The analysts’ consensus 12-month MRK stock price target was $91.73. It had an upside potential of 16.1% based on the closing price of $79.01 on 3 February. The stock projection varied from the low price target of $70 to a high of $110.
Among the recent ratings, JPMorgan Chase & Co rated the stock as ‘overweight’ and lowered its price target from $100 to $95, with an upside potential of 17.9%. The UBS Group also downgraded the stock’s rating from ‘buy’ to ‘neutral’. The price target was lowered to $76 from $98, with an upside potential of 4.65%.
However, Mizuho analyst Mara Goldstein rated the stock as a ‘buy’, with a price target of $100 and an upside potential of 31.89%.
According to the algorithm-based Merck share price forecast from Wallet Investor, as of 4 February, MRK stock could reach $80.896 by the end of December 2022. The service suggested the stock could be valued at $80.002 by the end of December 2023, $79.161 by the end of 2024 and $78.240 by the end of 2025.
Wallet Investor did not provide any Merck stock projections for 2030. The service estimated the pharmaceutical stock to hit $78.258 in January 2027.
When looking for Merck stock predictions, it’s important to bear in mind that analysts’ forecasts can be wrong. Projections are based on making fundamental and technical studies of the MRK stock performance, Merck stock analysis and Merck stock news. Past performance is no guarantee of future results.
It is important to do your own research, and remember that your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. Remember, you should never invest money you cannot afford to lose.
Is Merck stock a buy?
Several factors determine a stock’s price movement. It is ideal to study the stock’s past price movement and also note the broader macroeconomic factors at play to determine whether a stock can be purchased at any specific time.
Will Merck stock go up?
Given the current nature of volatile financial markets, one can’t predict or ascertain the movement of stock prices.
How high can the Merck stock go?
The analysts’ consensus 12-month MRK stock price target was $91.73, according to MarketBeat.
Does Merck pay dividends?
Yes, the company pays dividends.
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