Merck Could Be the Covid-19 Investment You’re Missing

Merck stock is not a fast mover but its momentum could accelerate with new developments

As you might recall, there was a recent shakeup among the list of companies included in the Dow Jones Industrial Average. Thankfully, iconic drugmaker Merck (NYSE:MRK) retained its place on the list. This solidifies the image of Merck stock as a safe, reliable investment.

Merck (MRK) logo outside of corporate building
Source: Atmosphere1 / Shutterstock.com

Yet, Merck’s continued inclusion in the Dow isn’t the headline story. Rather, it’s Merck’s progress toward the development of a vaccine for the novel coronavirus.

With so many other drugmakers competing in this area, it’s easy to forget about an old company like Merck. Seeking something newer and more exciting, many traders have focused their attention on Moderna (NASDAQ:MRNA), Novavax (NASDAQ:NVAX) and iBio (NYSEAMERICAN:IBIO).

I would encourage these traders to reconsider their stance on Merck stock. Just because it’s often considered a safe investment, this doesn’t mean that Merck’s share price can’t make a strong move in the near future.

A Closer Look at Merck Stock

Looking at the numbers associated with Merck stock, it’s not difficult to see why safety-minded investors flock to this one. For example, Merck offers a forward annual dividend yield of 2.92%. That’s appealing to folks who would rather focus on steady income than quick gains.

Moreover, Merck stock features a trailing 12-month price-earnings ratio of 20.58%. That’s competitive among Merck’s peers in the pharmaceutical sector.

Coming off the impact of the coronavirus, Merck stock’s recovery has been steady without going parabolic. This stands in stark contrast to some of the so-called coronavirus stocks that have made sharp but ultimately unsustainable moves in 2020.

Does all of this mean that Merck stock is destined for slow growth forever? Not necessarily. Recent development suggest that Merck’s shareholders might be in for a pleasant surprise as the company’s working toward innovative and potentially lifesaving medical solutions.

The More, the Better

When perusing through Merck’s second-quarter financial results, it’s evident that the company’s Covid-19 vaccine endeavors are now an integral part of the company’s business model.

Two Covid-19 vaccine candidates plus a novel antiviral candidate are in progress.

First, there’s V590, a “SARS-CoV-2 vaccine candidate that uses a recombinant vesicular stomatitis virus (rVSV) platform.” The second vaccine candidate is V591, which “uses a measles virus vector platform” and for which “clinical studies are planned to start in the third quarter.”

Then there’s the novel, orally available antiviral candidate known as MK-4482, which Merck is developing alongside Ridgeback Biotherapeutics. This has already “demonstrated antiviral properties against SARS-CoV-2, the virus that causes COVID-19, as well as the coronaviruses responsible for MERS and SARS.”

Thus, Merck is working hard to develop three different, highly promising anti-Covid-19 programs. That’s like having three different horses in the race. Prospective investors should appreciate this.

The Sooner, the Better

Frankly, there’s no time to waste in developing these potentially lifesaving programs. And it’s heartening to know that Merck is reportedly making significant progress in these endeavors.

On Sept. 3, Merck Chief Executive Kenneth Frazier announced that his company intends to commence human trials on one of its Covid-19 vaccine candidates “fairly soon.” Plus, Merck’s second vaccine candidate will probably start clinical trials later in 2020.

“Both of those are going forward,” Frazier added.

This announcement was great news for the medical community as well as for Merck stock holders.

On top of that, on Sept. 13, Merck revealed that the company had already begun testing V591 on healthy volunteers in Belgium. Reportedly, 260 subjects have been enrolled in this Phase 1/2 trial.

The Bottom Line

As you can see, there’s more to Merck stock than safe, steady price appreciation and dividends. Traders should take the company seriously as Merck has not only one, but three Covid-19 programs in progress.

And, by all accounts, Merck is making impressive headway in some of those programs. Therefore, Merck stock isn’t your typical Dow Jones stock. It’s also a coronavirus stock that could make a big move at any moment.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

David Moadel has provided compelling content and crossed the occasional line on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2020/09/merck-stock-could-be-the-covid-19-vaccine-investment-youre-missing/.

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