MRK (Merck & Co., Inc.) Stock Analysis - January 2025
Technical Overview:
Current Price: $97.45 (-0.50%)
Key Levels:
- Support: $94.48 (52-week low), psychological support at $95
- Resistance: $98.50 (near-term), $109.48 (200-day EMA)
- 52-Week Range: $94.48 - $134.63
Moving Averages:
- 20-day EMA: $98.41 (immediate resistance)
- 200-day EMA: $109.48 (long-term bearish trend)
Indicators:
- RSI (14): 45.22 (neutral, slightly bearish)
- MACD: Negative, signaling weak momentum
- IV Rank: 69% (high implied volatility, good for option selling strategies)
- MFI (Money Flow Index): 45.78 (neutral, no strong buying pressure)
Fundamental Overview:
- Market Cap: $246.51B
- Income: $12.15B
- Sales: $62.89B (P/S ratio of 3.92, fairly valued)
- Book Value per Share: $17.58 (trading significantly above book value)
- Cash per Share: $5.79
- Debt/Equity: 0.86 (moderate leverage)
- Quick Ratio: 1.15, Current Ratio: 1.36 (adequate liquidity)
Profitability Metrics:
- ROA: 10.83%
- ROE: 28.33%
- Profit Margin: 19.32%
- Gross Margin: 73.03%
Growth Metrics:
- Sales Growth (Y/Y): 8.17%
- EPS Growth (Y/Y): 163.70%
- EPS Next Year: 9.19 (positive growth projection)
Insider & Institutional Holdings:
- Insider Ownership: 0.10% (low, neutral)
- Institutional Ownership: 78.75% (high institutional backing)
- Short Interest: 1.35% (low, no major bearish bets)
Volatility:
- Beta: 0.40 (low volatility, defensive stock)
- ATR (14): 2.04 (moderate volatility)
Bias:
Neutral to slightly bearish
- MRK is in a downtrend below the 200-day EMA, signaling weak momentum.
- RSI and MACD suggest lack of strong buying interest, but support around $95 could hold.
- High IV Rank makes option selling strategies attractive.
Trade Ideas:
1. Bear Call Spread (Bearish Play)
- Sell the $100 Call
- Buy the $105 Call
- Expiration: 30-45 days
- Rationale:
- Profits if MRK stays below $100 resistance.
- Takes advantage of high IV (expensive options).
2. Iron Condor (Range-Bound Play)
- Sell the $95 Put / Buy the $90 Put
- Sell the $100 Call / Buy the $105 Call
- Expiration: 30-45 days
- Rationale:
- Profits if MRK stays between $95 and $100.
- Takes advantage of high IV and time decay.
3. Cash-Secured Put (Bullish Play)
- Sell the $95 Put
- Expiration: 30-60 days
- Rationale:
- Generates income while potentially buying MRK at a discount if assigned.
- Uses support at $94.50 as a defense level.
Conclusion:
- Preferred Trade: Bear Call Spread – Higher probability given technical weakness and high IV.
- Key Watch Levels: $95 support and $100 resistance.
- Risk Management: Stop-loss if MRK closes above $100 for bearish trades.
