Should Merck Be in Your Portfolio?

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With shares of Merck (NYSE:MRK) trading around $55, is MRK an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Merck is a global healthcare company that delivers health solutions through its prescription medicines, vaccines, biologic therapies, animal health, and consumer care products, which it markets directly and through its joint ventures. The company consists of four operating segments: the Pharmaceutical, Animal Health, Consumer Care, and Alliances segments, and one reportable segment in the Pharmaceutical segment. Merck aims to provide valuable healthcare products and services to consumers, animals, and companies in need worldwide. Look for the company to see rising profits as it advances the products and services of the healthcare field.

Merck appointed Baxter International Inc executive Robert Davis as chief financial officer, as it looks to cut costs and focus on drugs that are more likely to be approved by regulators. Merck — struggling with slowing sales, delays in new drug approvals, and failures of experimental drugs — said in October it would cut 8,500 jobs and chop annual operating costs by $2.5 billion. ”The main thing for Davis to focus on is trying to make Merck’s structure more flexible so that it can move more quickly to areas that have good returns,” Morningstar analyst Damien Conover said. He said a key decision Davis would have to help make related to the company’s plans for its animal healthcare and consumer business. Reuters reported in February that Merck was in discussions to sell its consumer healthcare business, as part a plan to narrow its focus to its pharmaceutical products with the best chance of winning regulatory approval.

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