In Wednesday's early morning trading session shares are gaining 0.28% to $57.87.
"We view Merck's outlook as solid though not compelling enough at this time to warrant anything other than a neutral," analysts said.
The next four years should show a much improved earnings trend compared with the recent past, however, the revenue challenges are such that the pipeline needs to work even harder to generate a more dynamic top-line, analysts added.
What has been positive is management's efforts so shake-up the R&D organization and sell the consumer health business, according to the analysts note.
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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel its 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:
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.09, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for MERCK & CO is currently very high, coming in at 94.01%. It has increased significantly from the same period last year. Despite the strong results of the gross profit margin, MRK's net profit margin of 10.11% significantly trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market on the basis of return on equity, MERCK & CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- MRK, with its decline in revenue, slightly underperformed the industry average of 2.1%. Since the same quarter one year prior, revenues slightly dropped by 8.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: MRK Ratings Report