Merck has upside to $82
Analyst forecasts for Merck earnings came down sharply early this year, but lately they've stabilized and even ticked upward a little. Merck is still priced for an optimistic market, with forward P/E around 15 and PEG around 2-3. This is reasonable for a large cap company with 3% dividend and a great reputation, but it's not bargain pricing, exactly. A second round of lockdowns or a second wave of Covid-19 could hurt the stock again.
But as long there's no major deterioration of the macroeconomic outlook, the fair value range for Merck is about $75-82 per share. Analysts have been slow to make any forecasts for 2022 due to macroeconomic uncertainty, but I predict that the top end of the fair value range will shift upward to $87 per share once the 2022 forecasts finally come in.
Merck is oversold today on the hourly RSI and curling upward. MACD is below the signal line, but also curling upward. A few minutes ago Merck announced an FDA approval to expand the label for GARDASIL, its HPV drug. I suspect this may function as a catalyst to send Merck back upward toward $82 per share. I bought some shares after-hours, and if I can get in cheap enough, I will consider some call options tomorrow with maybe a one-month expiration.
But as long there's no major deterioration of the macroeconomic outlook, the fair value range for Merck is about $75-82 per share. Analysts have been slow to make any forecasts for 2022 due to macroeconomic uncertainty, but I predict that the top end of the fair value range will shift upward to $87 per share once the 2022 forecasts finally come in.
Merck is oversold today on the hourly RSI and curling upward. MACD is below the signal line, but also curling upward. A few minutes ago Merck announced an FDA approval to expand the label for GARDASIL, its HPV drug. I suspect this may function as a catalyst to send Merck back upward toward $82 per share. I bought some shares after-hours, and if I can get in cheap enough, I will consider some call options tomorrow with maybe a one-month expiration.
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