Merck Names Clark CEO

'Middle Ground'

Gilmartin's successor had been the subject of rampant speculation for quite some time, with the names of outsiders, such as Fred Hassan, chief executive of Schering-Plough (SGP), being discussed. Among Merck insiders who found their way into Wall Street's rumor mill were Judy C. Lewent, the chief financial officer; Bradley T. Sheares, president of Merck's U.S. human health operations; and Peter S. Kim, president of Merck Research Laboratories.

Prudential Equity Group's first impression of Clark "is relatively favorable," says Tim Anderson, the firm's pharmaceutical analyst, in a Thursday research note. "This is a 'middle ground' choice for a new CEO, and is unlikely to usher in pure regime change. ... Overall, probably a decent choice for a new CEO." Anderson is neutral on the stock. He doesn't own shares, and his firm doesn't have an investment banking relationship.

"We view the stock impact as very modest," James Kelly of Goldman Sachs says in a report to clients. He views Clark's promotion as having little effect on senior managers whose power will be "undiminished." Clark's selection means corporate strategy will "move forward slowly," says Kelly, who has an in-line rating on the stock. He doesn't own shares, and his firm has had an investment banking relationship with Merck.

"We believe the news will be a mild disappointment, as many investors may have been looking for a more dynamic choice," adds David Moskowitz, of Friedman Billings Ramsey in a Thursday research report. "An external candidate may have been received more positively, in our view."

Moskowitz, who has a market perform rating on the stock, doesn't own shares, but his firm seeks to do business with companies mentioned in research reports. He says that investors may be disappointed that Clark lacks a research and development background, given that reviving Merck's R&D pipeline is one of the company's biggest challenges.

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