Leerink Swann Upgrades Merck & Co (MRK) to Outperform; Near-Term Risks Already Factored In

November 9, 2009 8:33 AM EST

Leerink Swann upgrades Merck & Co (NYSE: MRK) from Market Perform to Outperform.

Leerink analyst says, "We are upgrading MRK to Outperform, reflecting our growing comfort that near-term risks (ARBITER 6, Temodar U.S. patent challenge, Remicade/Simponi arbitration with JNJ) are quantifiable and largely factored into the MRK's current valuation and Street expectations. A MEDACorp cholesterol survey (published today) suggests another leg down for Zetia/Vytorin in the U.S. from ARBITER 6, and headlines associated with a potential editorial from Steve Nissen may spark weakness in MRK shares, but we believe the current valuation already implies the loss of >50% of the cholesterol franchise, 100% of U.S. Temodar sales, and up to 30% of Remicade/ Simponi profits. Our industry contacts believe chances of a favorable settlement with JNJ are good and that Merial/Intervet FTC overlap may be overestimated and cost synergies underestimated. Given these opportunities coupled with MRK's substantial late-stage pipeline, we recommend that investors use near-term liquidity to build, or add to, a position in MRK."

To see more analyst ratings on MRK Click Here.

Merck & Co., Inc. provides products for human and animal health in the United States and internationally.

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