Merck & Co., Inc. (MRK)

New cervical cancer vaccine is a high profile catylst to offset some of the negative publicity to the spate of Vioxx lawsuits; the company is still solid and has the resources to fight the lawsuits and acquire companies that offer an instant pipeline of new ideas. Yes, it is losing patent protection on past blockbuster drugs, but it's R&D should not be discounted ( witness the cervical cancer vaccine )

As of July 10, 2009, part of the Morningstar Wide Moat Focus index, which tracks the 20 wide-moat firms wide the lowest price-to-fair value ratio. Firms are selected from 174 companies defined as "wide-moat" by Morningstar.

Fair value estimate is listed as $46.
http://news.morningstar.com/articlenet/article.aspx?id=298017

I sometimes wonder how it is that a pharmaceutical stock classifiies as a wide-moat. Yes, they have patent protection, but you know there are many competitors developing new drugs in the same class and the moat will last only as long as the patents (or the tricks that they can use to extend the life of those patents). Maybe "temporary-moat" would be a better term for firms that rely on patent protection for their competitive advantage.

Don't let the pending litigation scare you away. If anything, it should keep it undervalued for some time with fines and/or negative judgements most likely being negligible cash wise to the 5 Yr. timeline of MRK which will be higher valued in that time.

They bought SGP on the cheap.
SGP has the pipeline and management that MRK needed.
MRK has the deep pockets to carry through with the drugs in the pipeline, SGP did not.
Now the question is:
Does MRK have the fortitude to do what has to be done with their own management.
We shall see.
IF done correctly MRK has the raw materials to become THE dominate drug company that they were many years ago.

Not only does Merck have lots in the pipeline but I like the way they give back to the world and make their products available to the third world. This may not help their bottom line but certainly helps their Karma factor. Vioxx decision will cause a short term fall in price and a good entry point to a good company with a nice steady dividend.

As the son of a pharmacist, I have a little insight to the medical field. Simply put Merck is a very good drug maker that has the Gardasil vaccine that can prevent a virus that can cause cervical cancer. This vaccine has already been moved to be a mandatory vaccine in Texas, but with the power to prevent cancer, it will become mandatory around the globe.

Has had a nice run-up recently, but too many problems ahead for this major pharma to sustain the trend...look out below

Not as strong a company as PFE, overall. The price went way up during the bubble (when it should only have gone up) and then came way down when earnings drifted downward (when perhaps it would only have gone down some at that point). Earnings are currently choppy, but headed upward again. I think the price will go along. As a fairly volatile stock in the past, the price may very well race ahead of earnings again, giving someone with an iron stomach the chance for a really nice ride.

They have finally been approved for giving immunization shots for cervical cancer. Our local County Health Clinic has already ordered Merck's shots and will be supplying them to the public. I can see that every health clinic and doctor's office in the country and even overseas will be carrying these since they can save many women's lives.

There are fundamental shifts occurring in the industry that will eat away at the efficiencies MRK currently enjoys. While their response to these shifts will be correct, their size will slow down their reaction time, causing loss of confidence in the investment community.

Improving earnings/ management, turning around, good R & D pipeline, several early drugs that may be real blockbusters, paid a good dividend to just wait, won't need to appreciate much to give > 10% total return

DotD

Was hurt by Vioxx conection with heart attacks, but most doctors still think this is a good drug. Latest drug GARDASIL was recently approved by FDA is a vaccine for woman against cervical cancer. Many states have already started considering legislation to make it a requirement for adolesent girls. Texas just pasted this legislation. This could expand this drug very quickly.

This is an excellent business that has fallen on some hard times due to a dwindling pipeline. The SGP acquisition should help with that. . It has excellent margins and an astronomical 30% ROE. Single-digit forward P/E of about 8. It usually trades for twice that. There's a more than adequate 6% yield. Did I mention that they have $12 billion sitting on the balance sheet? There's been a lot of talk about healthcare reform as of late and that has attracted the attention of short sellers. Still, healthcare reform is a canard. Comprehensive healthcare reform has been threatened for as long as I can remember (I'm 32) and it never been passed. It's not going to happen anytime soon. I use it as an opportunity to buy the HMOs and pharmaceuticals on sale.

THIS STOCK MAY GO NEAR $40 AFTER IT CLOSES ON SGP...ALL IT NEEDS A A LITTLE GOOD NEWS AND A SMOOTH TRANSITION.
IF YOU ARE HOLDING...KEEP HOLDING, CONSIDER TAKING PROFITS AS IT NEARS $40 - IT PROBABLY WON'T STATY THERE.

A leading pharmaceutical growth company with multiple products in research or in the pipeline in human testing trial stage or near approval by FDA. Only one executive Ms. Wendy Yarno sold large shares of her position at $52 (52 week high $55),much higher than the present price of the stock,...smart don't you think so?. She will eventually receive additional stock option to make up for what she sold. The remaining executives sold between 1000 and 2000 shares, such a nominal amount. This is a major pharmaceutical research company in the world. The price is very cheap at this level. J. Paul Getty was once quoted saying, when asked how dd he made money in the stock market his answer was, if I can paraphrase, I buy when everyone is selling and I sell when everyone is buying. Their drug pipeline is deep. A great long term growth as well as defensive stock. With recession looming on the horizon this defensive stock will ouperform the S&P.

Had it's share of rough times recently, but is too strong of a company to keep down. I think the whole Vioxx thing will actually help the company moving forward because it has forced the management to be more focused and will force the company to be more stringent testing new products so this does not happen again.

"Gardasil" the cervical cancer vaccine wil prove to be an enormous blockbuster drug for MRK.
Gardasil is being recommended as a mandatory vaccine for girls in Europe and other countries will follow.
Gardasil has no competitor until GSK's Cervical is lodged and approved by the FDA.
Annual Gardasil sales should be $1.5 billion + annually for at least 3-5 years

Baby boomers are getting older and sicker, and they will need more drugs. MRK is a major manufacturer of them. Concerns though about their pipeline might limit the growth.