Securities Analysis Project

The purpose of this paper is to research, analyze and whether to recommend Merck & Co. To potential investors. I will be using both qualitative and quantitative analysis based on previous years of data for the company. I will provide efficient background information (life cycle analysis) including a brief history of Merck & Co. It’s stock chart since being added to the market, any advantages or disadvantages it has within its industry and important news that may affect a potential investor’s willingness to buy or sell this stock.

I will provide data and information regarding the Return on Equity (ROE), which shows growth of the stock. I will also provide a projected future growth rate of earnings, its rate of return and valuation techniques. In conclusion, I will recommend a buy or sell option and a target price based on all analysis and data provided.Competitive forces in the pharmaceutical industry: Monopolistic competitive One of the fastest growing industries (healthcare and pharmaceuticals) A lot of generic brand competition, but this can be combated with discount coupons Multiple impasse that produce drugs No one company has control of the industry Most companies don’t compete directly on price for new drugs.

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This is usually done through the insurance companies Entry barriers can be difficult because of costs of resources and technology, R, getting patents.Company News (previous and current): Lawsuits Possible restructuring R issues Cost cutting Positive Outlook: Merck is a well-run company with advanced in-house R capabilities. Although the company is not completely admonished from faltering performances by its imitators, many believe this offsets any setbacks from strong sales of new product approvals like Victories as well as cost- cutting efforts. The combination of Mercer’s expanded base business, diverse product portfolio, and late- stage pipeline potential will support long-term growth.

Further, the company’s dividend yield provides any downside support. Other: The Sheering acquisition has brought a strong pipeline and complementary products with little near-term patent cliff exposure. Strong cash position enhances financial flexibility. Merck has an attractive dividend yield. Negative or Neutral Outlook: Merck is facing a challenging period with Cord, Postman and the cholesterol franchise experiencing a substantial decline in sales.

The company also faces a formidable patent problem with Ozark/Hazard and Singular losing patent protection. The acquisition of Sheering-Plough has lowered Mercer’s risk profile, expanded its pipeline and diversified its healthcare portfolio significant earnings growth. The combined company appears unlikely in the near term and uncertain in the long term.

There is a concern about the delay in the regulatory filing for iodination. Mar 1, 2013