Since we looked at Merck last year, the company has seen its score drop by two points due to another drop in revenue and a rise in the payout ratio. The stock has done well, though, rising nearly 20% over the past year as it has effectively worked through its patent-expiration issues.
Merck has seen its trailing sales drop substantially since its Singulair asthma drug went off patent in 2011. Yet the company has looked to other potential blockbuster drugs to take Singulair’s place, including diabetes treatments Januvia and Janumet, which have shown early signs of great potential success.
But one measure Merck & Co., Inc. (NYSE:MRK) has said it doesn’t want to resort to is breaking up the company. AbbVie Inc (NYSE:ABBV) has emerged from former parent Abbott Laboratories (NYSE:ABT) as a big-pharma powerhouse relying largely on its blockbuster Humira, but Merck doesn’t want to separate its pharma unit from the rest of its businesses. At the same time, Merck also doesn’t seem interested in following the strategy that Pfizer Inc. (NYSE:PFE) used in launching an IPO of its Zoetis animal-health unit. Pfizer Inc. (NYSE:PFE) found that allowing Zoetis to trade as a separate stock gave interested investors desirable direct access to a unit that’s a relatively small piece of Pfizer Inc. (NYSE:PFE)’s overall operations, but Merck sees benefits to keeping itself whole, rather than having the distraction of separately traded bits and pieces of its business.
Just yesterday, Merck got some great news as an advisory board allowed a clinical trial of its Vytorin cholesterol drug to go forward. Earlier safety concerns had some investors worried about the drug’s future, but the panel cited no safety issues in continuing the trial. Still, with the trial expected to run through September 2014, investors have a long time to wait before finding out whether Vytorin will see favorable results that could boost its marketability in the future.
For retirees and other conservative investors, Merck doesn’t have the history of consistent dividend increases that many of its peers offer. But with a nearly 4% yield, Merck & Co., Inc. (NYSE:MRK) would be worth a closer look if it could get its earnings up enough to remove any concerns about cash-flow availability in the future.
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The article Will Merck Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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