What’s Next For Merck Stock After A 6% Fall In A Month?

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Upside
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Market
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Trefis
MRK: Merck logo
MRK
Merck

The stock price of Merck (NYSE: MRK) has seen a fall of 6% over the last month, while it is down 1% year-to-date. This marks a better performance than the broader markets, with the S&P500 down 6% over the last month but down 10% so far this year. The decline in broader markets can be attributed to the geopolitical tensions with Russia and Ukraine and its impact on oil prices.

On the positive side, Merck’s Q4 results (announced last month) were comfortably above the street estimates aided by its Covid-19 pill sales, along with continued market share gains for its top-selling drug – Keytruda. Looking forward, the company has guided for a mid-to-high teens revenue growth in 2022. In our previous updates on Merck stock, we maintained our view that MRK stock is undervalued, and now this dip can be used as a buying opportunity. We estimate Merck’s Valuation to be around $100 per share, reflecting a 31% upside from its current levels of $76.

But what about the near term? Since MRK stock has seen a fall of 6% in a month, will it continue its downward trajectory, or is a rise imminent? Going by its historical performance, there is a higher chance of an increase in MRK stock over the next month. Out of 201 instances in the last ten years that MRK stock saw a twenty-one-day fall of 6% or more, 136 of them resulted in MRK stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 136 out of 201, or about a 68% chance of a rise in MRK stock over the coming month. See our analysis on Merck Stock Chances of Rise for more details.

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While MRK stock may see higher levels over the next month, seeing how its peers stack up is helpful. Check out Merck Peers to see how MRK stock compares against peers on metrics that matter. You can find more useful comparisons on Peer Comparisons.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years’ data

  • After moving 0.5% or more over five days, the stock rose on 52% of the occasions in the next five days.
  • After moving -0.2% or more over ten days, the stock rose in the next ten days on 56% of the occasions
  • After moving -5.6% or more over a twenty-one-day period, the stock rose on 68% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in MRK stock over the next five days, ten days, and one month.

Merck (MRK) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: LLY highest at 4.3%; PFE lowest at -3.7%
  • Ten-Day Return: LLY highest at 6.3%; PFE lowest at -8.1%
  • Twenty-One Days Return: BMY highest at 5.7%; PFE lowest at -15.8%

While MRK stock may see higher levels, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Medtronic vs. IDEXX Laboratories.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 MRK Return 0% 0% 30%
 S&P 500 Return -1% -10% 92%
 Trefis MS Portfolio Return 0% -11% 252%

[1] Month-to-date and year-to-date as of 3/2/2022
[2] Cumulative total returns since the end of 2016

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