Is Now a Good Time to Buy Merck & Co., Inc. (MRK) Stock?

With all of this and other challenges facing Merck, short interest has grown considerably. Shares sold short as of June 15 are 250% higher than levels from just a month before that point.

The big picture
Is everything bleak for Merck these days? Not at all.

An FDA panel in May voted 13-3 to recommend approval of the company’s insomnia drug, Suvorexant. However, even that positive news wasn’t as good as hoped. The panel only recommended approval of lower doses of Suvorexant and deemed higher doses that Merck wanted to market as unsafe.

Merck announced encouraging results in June from an early-stage study of lambrolizumab. The drug helped shrink tumors in 38% of patients with advanced melanoma. Merck is proceeding to late-stage studies of lambrolizumab in the third quarter. The FDA gave breakthrough therapy designation to the drug in May. Many expect lambrolizumab could be a major blockbuster for Merck down the road.

The company also claims several other drugs under review by the FDA and in late-stage studies. An FDA advisory panel makes a decision on sugammedex, Merck’s neuromuscular blockade reversal drug, in July. Another important drug for Merck, vintafolide, which targets ovarian cancer, is already under review by European regulators and is in phase 3 in the United States.

Keep in mind also that even with some bad news, Merck stock is still ahead by almost 14% for the year. That’s better than the S&P 500 as a whole. And Merck’s dividend yield of 3.7% looks quite attractive.The company also announced a share buyback in May of almost $5 billion. These all add up to definite good news for Merck shareholders.

With the bigger picture in mind, is now a good time to buy Merck stock? There are better picks overall among pharmaceutical stocks, but I think investors who buy shares in Merck will do well over the long run.

The article Is Now a Good Time to Buy Merck Stock? originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights and The Motley Fool have no position in any of the stocks mentioned.

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