NEW YORK (Thomson Financial) - Shares of Merck & Co. rallied Monday, enough
to make them the biggest percentage gainers among Dow industrials components,
following positive comments from JPMorgan regarding cervical cancer treatment
Gardasil.
The stock rose 2.7% to $37.99, and was up as much as 3.1% at a 3-week high
of $38.14 in intraday trading.
JPMorgan Analyst Chris Schott reiterated his overweight rating on Merck, and
increased his estimates for Gardasil after GlaxoSmithKline PLC said it was
pushing back submitting more information that the U.S. Food and Drug
Administration requested on its cervical cancer treatment Cervarix until the
first half of 2009. Glaxo had previously planned to submit all the data at the
end of the current quarter.
Schott said he had previously estimated that Cervarix would take 10% of the
U.S. market in 2009, but he now expects O% share. He had expected Cervarix to
have 25% share in 2010 through 2012, but now projects 10% in 2010, 18% in 2011
and 25% in 2012.
He raised his 2009 to 2011 U.S. Gardasil sales forecast by $50 million to
$340 million per year, and his earnings estimates increase by 2 to 11 cents a
share.
Schott said the news on Glaxo's Cervarix was not particularly surprising,
"but nonetheless a positive for Merck."
He said Merck remains his "top pick" among the companies he covers, and sees
upside in the share price "as better-than-expected sales of Gardasil and
Januvia, coupled with continued expense reduction, provide significant operating
margin leverage."
Tomi Kilgore
tk1
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