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Merck's Future Looks Healthier

Stocks in this article: MRK JNJ PFE BMY GSK

NEW YORK ( TheStreet) -- When I last discussed Merck's (MRK) growth prospects, I told you the stock was a relative bargain given that shares of Johnson & Johnson (JNJ), Pfizer (PFE) and Bristol-Myers Squibb (BMY) were all (then) trading near 52-week highs.

Merck wasn't a popular stock at the time due to concerns about the company's pipeline and expiring patents, but I believed it was still worthwhile. Since that call, shares of Merck have increased 20%. Last week, an FDA advisory panel recommended the approval of Merck's new allergy drug Ragwitek, so I expect the company's winning streak to continue.

[Read: 3 Winners on Stronger Chinese Currency]

Analyst David Risinger of Morgan Stanley, who has a $60 price target on Merck, recently cited the company's immuno-oncology candidate MK-3475 as a reason to own the stock. While acknowledging that Merck's valuation may not be as compelling to value-oriented investors, Risinger warned against being too cautious. I agree. As I pointed out several months ago, there's still a long-term growth story developing with Merck.

I'm not trying to convince you Merck is superior to Pfizer and GlaxoSmithKline (GSK). That argument goes beyond the scope of this article. What I do know, though, is that Merck's management hasn't been dozing off at the wheel in the trailing twelve months. And with some strategic moves and a rededication to research and development, they've now positioned this company to regain the market share it has lost.

The Street has finally taken notice -- albeit long after my initial call. The company will report fourth-quarter and full-year earnings on Wednesday. Merck's management has remained steadfast about returning value to shareholders. They've done a solid job up to this point. But it's going to take more convincing to get new investors to buy in at near 52-week highs.

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