Schering-Plough ( SGP) looks relatively cheap on a price-to-sales basis and continues to see good results in its cholesterol joint venture with Merck ( MRK), Goldman Sachs said in upgrading the stock Monday. Goldman raised Schering-Plough to in-line from underperform and raised its earnings estimates on the drugmaker for the next three years. The stock closed at $18.48 Friday. In recent premarket trading, it was up 55 cents, or 3%, to $19.03. In a note, the brokerage said Schering-Plough trades at about 20 times its new 2008 earnings estimate of 93 cents a share, above the industry average. But the shares fetch only about 2.5 times current adjusted revenue, compared with a sector average of 3.5. "Schering-Plough's revenues are more likely to grow in 2006 than Merck, Pfizer ( PFE) and Bristol-Myers ( BMY), so this disparity becomes more stark going forward," Goldman said. Goldman was bullish on the prospects for Schering-Plough's share of Zetia and Vytorin, which it sells through a joint venture with Merck. While the risk of a generic Zocor "are real," Goldman said, U.S. Vytron sales should rise 15% in 2007. The main risk to Schering-Plough is a shortage of drug candidates. "Schering-Plough needs another late-stage product or recent launch to maximize the operating leverage of the franchise," the brokerage wrote. "Management has been resistant to dilutive transactions in their evaluation of strategic alternatives (licensing or acquisitions). We believe that the market will probably rapidly digest the impact of any transaction that leverages the primary care selling infrastructure and look favorably on the business diversity and the operating leverage it would provide." Schering-Plough was also upgraded to neutral from sell at Bank of America Monday.