Just As I Predicted — On Heels Of Buyback & Parent-Only Debt — Merck Upped: Price Target Now $54

As if dancing some elegant Austrian waltz, in perfect time, Jefferies & Co. has just twirled Merck around to a “Buy”, and set a 52 week price target of $54. That’s a major jump. [This is all as I said it would unfold, post the Apple-like moves of a few weeks ago.]

Per Yahoo! News:

. . . .Merck was upgraded at Jefferies to buy from hold. $54 price target. Stock is attractive, based on a sum-of-the-parts valuation, Jefferies said. . . .

Nice!

The fact that Pfizer has fetched nice multiples, and ahead of schedule, too — for its full spin-off of its Animal Health businesses likely gives Merck yet another lever to pull, should the future for its pipeline dim significantly. That is the “between the lines” meaning Jefferies offers, in saying that the “sum of Merck’s parts” justifies a higher stock price. Afterall, if Merck were to unlock that Animal Health value, via spinoff, it would be separately priced on the NYSE, as the argument runs. And the Merck shareholders would reap that benefit — just as they are now reaping the stock buyback’s benefits.

To be clear, though, Chairman Fraizer has said he plas to keep the businesses intact. Even so, it leaves Merck another arrow in its quiver, should a rainy day turn into a typhoon, in pharma. At least that’s how Jefferies sees it.

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