Merck's Fundamentals Improving Despite Vioxx Headlines

Standard & Poor’s Equity Research analyst Herman Saftlas raised the target price for Merck shares to $34 from $30 citing “improving fundamentals” after the drug manufacturer reported fourth-quarter 2005 earnings on Tuesday. Merck (nyse: MRK - news - people ) reported fourth-quarter earnings of 64 cents per share, matching the analyst’s estimate. “Results benefited from strong growth in joint venture income and cost controls,” the analyst said in a report. “Although the loss of patent protection on Zocor is expected to lower 2006 earnings per share, we think new drugs and cost cuts should facilitate strong [earnings] growth over the rest of the decade, before restructuring charges,” said the research analyst. In addition, he noted that Merck’s stock remains “vulnerable to Vioxx headlines.” The analyst reiterated a “hold” opinion on Merck.