MRK stock is a good buy here for conservative income investors
Before the COVID-19 pandemic, Merck (NYSE:MRK) stock was a
good one to own. The performance of Merck stock matched that of the S&P
500, and it paid a steadily rising dividend.
Since then, the obsession with growth and vaccines has told
a different story. Over the last two years the average S&P stock is up
nearly 49%, Merck just 3.7%.
Recently, however, the charts for Merck have turned more
bullish. It has a drug to treat Covid-19 that could be distributed worldwide.
The third quarter results were upbeat.
Can we go back to curing cancer again?
The Good News
Merck’s molnupiravir, an antiviral pill for people with mild
Covid-19 at risk for more serious illness, was approved recently by U.K.
regulators. It’s now expected to win emergency use authorization in the U.S. by
December. That would open $2.2 billion
in orders from the Food and Drug Administration, with options for more. Merck
expects to produce 20 million courses of the drug next year.
Merck is also closing in on the $11.5 billion acquisition of
Acceleron Pharma (NASDAQ:XLRN), which has new drugs for anemia and
hypertension. There had been concern the deal would not go through, but
European regulators are now signing off.
Then there’s the possibility Merck could spin off its animal
health division, a move that has proven profitable for other companies.
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