Merck "overweight"

09/15/04 - Prudential Financial

NEW YORK, September 15 (New Ratings) - Analyst Tim Anderson of Prudential Financial maintains his "overweight" rating on Merck & Co (MRK). The target price is set to $54.

Shares of Merck & Co, a leading research-driven pharmaceutical company, are currently trading at $45.45.

According to Prudential Financial's research note published this morning, the company is likely to receive FDA approval for its second-generation COX-2 inhibitor pain drug, Arcoxia, in October this year. Merck is already running "coming soon" advertisements in major medical journals and a few Internet sites, the analyst says. The market believes, however, that the FDA approval for Arcoxia would take much longer, the analyst mentions.

Arcoxia is likely to be awarded the "best in class efficacy" label by the FDA, according to Prudential Financial. The approval would enable the company to regain its lost market share from rival Pfizer, the analyst says. Arcoxia is expected to boost Merck’s earnings significantly, Prudential Financial adds.

The EPS estimates for FY2004 and FY2005 are $3.13 and $3.25, respectively. The P/E estimates for FY2004 and FY2005 are 14.5x and 14.0x, respectively.

Prudential Financial maintains its "overweight" rating on Merck & Co.