Will Merck (MRK) Stock Be Helped Today by Zetia Study?

NEW YORK (TheStreet) -- Shares of Merck & Co.  (MRK)  are up 0.73% to $59.50 after the embattled drug Zetia proved effective at reducing risk of heart attacks, strokes and other heart problems in a large, long-awaited trial, marking a new milestone in the 40-year-old battle to fight cardiovascular disease by lowering cholesterol, the Wall Street Journal reports.

The benefit was modest, a 6.4% reduction in all cardiovascular events, in a high-risk, aggressively treated population of patients, according to the Journal, but it was the first time a drug outside of the blockbuster statin class of cholesterol-lowering medicines was shown to lower the risk of serious consequences of cardiovascular disease.

What impact this may have on sales of Zetia and Vytorin is not clear, the Journal said, noting that Zetia loses patent protection in two years; however, the study may be a boon for makers of a new class of low-density lipoprotein (LDL)-reducers called PCSK9s. They are being developed by Sanofi SA  (SNY)  and Regeneron Pharmaceuticals  (REGN) , the Journal added.

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Shares of Sanofi are up 1.84% to $47.56. Shares of Regeneron are up 2% to $403.09.

Separately, TheStreet Ratings team rates MERCK & CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MERCK & CO (MRK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, MRK's share price has jumped by 25.77%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has increased to $4,348.00 million or 10.10% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -19.99%.
  • The debt-to-equity ratio is somewhat low, currently at 0.62, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.80 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.7%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for MERCK & CO is currently very high, coming in at 77.97%. Regardless of MRK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MRK's net profit margin of 8.47% is significantly lower than the industry average.
  • You can view the full analysis from the report here: MRK Ratings Report

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