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Merck (MRK) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 min read

Merck (MRK) closed at $79.42 in the latest trading session, marking a +0.16% move from the prior day. This change outpaced the S&P 500's 0.21% loss on the day. Elsewhere, the Dow lost 0.67%, while the tech-heavy Nasdaq added 0.51%.

Coming into today, shares of the pharmaceutical company had lost 1.23% in the past month. In that same time, the Medical sector gained 4.78%, while the S&P 500 gained 4%.

Investors will be hoping for strength from MRK as it approaches its next earnings release. In that report, analysts expect MRK to post earnings of $1.35 per share. This would mark year-over-year growth of 16.38%. Our most recent consensus estimate is calling for quarterly revenue of $12.59 billion, up 6.06% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.90 per share and revenue of $48.09 billion. These totals would mark changes of +13.68% and +2.66%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for MRK. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.49% lower. MRK currently has a Zacks Rank of #3 (Hold).

Digging into valuation, MRK currently has a Forward P/E ratio of 13.43. This valuation marks a discount compared to its industry's average Forward P/E of 13.66.

It is also worth noting that MRK currently has a PEG ratio of 1.88. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Large Cap Pharmaceuticals was holding an average PEG ratio of 2.2 at yesterday's closing price.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 118, which puts it in the top 47% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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