As is often the case, Wall Street loves the one time, and ongoing, savings created when public companies announce massive layoffs. In the near term, the reduced expenses fall straight to the EPS line as earnings increases of like amount. This is so, even if longer term, the cuts are akin to dumping a cup of sugar into company’s growth engine (and I personally think that may be the case here, in fact).
And so, in the wake of Merck’s latest 8,500 job cuts (targeting $2.5 billion in savings) while I was busy with my day gig(s), my friends at Goldman Sachs (i.e., “the smartest guys in the room” — just ask ’em!) upped Merck’s near term price target to $54 (from $52, if memory serves).
To be clear, I believe this research by Goldman conforms to the standards of Regulation AC — I am just amused, all the same. Here is an MSM report on the item:
. . . .Merck & Co (NYSE: MRK) had its price target upped by Goldman Sachs Group Inc. to $54.00 in a research note issued to investors on Tuesday, Analyst Ratings Network reports. . . .
Of course, I remain quite skeptical about whether Goldman Sachs can ever offer completely independent research on Merck. The latest iteration of that back story — from July 2013 — is under that last link.
[I think the earliest version of just such a Goldman story I ever wrote was in early 2009, here.]
Namaste, one and all — I’m off the grid for a what may turn out to be quite a bit of time. Keep it spinning in good karma!