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Merck (MRK) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 mins read

Merck (MRK) closed at $80.04 in the latest trading session, marking a +0.51% move from the prior day. This change lagged the S&P 500's 1.74% gain on the day. Meanwhile, the Dow gained 1.91%, and the Nasdaq, a tech-heavy index, added 1.88%.

Prior to today's trading, shares of the pharmaceutical company had lost 4.44% over the past month. This has lagged the Medical sector's loss of 0.19% and the S&P 500's loss of 1.86% in that time.

MRK will be looking to display strength as it nears its next earnings release, which is expected to be October 27, 2020. The company is expected to report EPS of $1.45, down 3.97% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $12.01 billion, down 3.12% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.69 per share and revenue of $47.79 billion, which would represent changes of +9.63% and +2.03%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for MRK. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.01% lower. MRK is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that MRK has a Forward P/E ratio of 13.98 right now. This valuation marks a discount compared to its industry's average Forward P/E of 14.08.

Meanwhile, MRK's PEG ratio is currently 2.07. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Large Cap Pharmaceuticals stocks are, on average, holding a PEG ratio of 1.95 based on yesterday's closing prices.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 188, which puts it in the bottom 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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