Merck stock price forecast for Q4 2021 amid positive data on a covid-19 pill

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 1, 2021
  • Merck shares on Friday spiked more than 9% after revealing promising data for a covid-19 pill.
  • Merck’s molnupiravir reduced covid-19 hospitalisation and death by 50% in phase three clinical trials.
  • The drug is being developed in conjunction with Ridgeback Biotherapeutics.

On Friday, Merck & Co Inc. (NYSE:MRK) shares spiked more than 9% after announcing positive developments in its covid-19 pill. The company with Ridgeback Biotherapeutics are developing an oral antiviral medicine, molnupiravir for the treatment of covid-19.

In the drug’s phase three clinical trials data, it reduced the risk of hospitalization and death in people infected with covid-19 and its variants by 50%.

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According to the data, only 7.3% of covid-19 patients treated with molnupiravir were either hospitalized or died compared with an average of about 14.1% of patients who received placebo treatments.

Should you buy Merck shares?

With the world still struggling to get rid of the deadly virus through vaccinations, a treatment that reduces the risk of hospitalisation and death could be a game-changer. Moreover, even those vaccinated could also use the drug to further enhance their chances of recovery, thereby boosting molnupiravir sales.

As a result, Merck’s covid-19 pill could boost the company’s top line over the years. In addition, the company could submit applications to use the drug for the treatment of related illnesses, further boosting its revenue potential.

Therefore, with Merck shares still trading at an attractive forward P/E ratio of 11.66 despite Friday’s spike, it could be time to add the MRK stock to your portfolio.

Source – TradingView

A retest of all-time highs?

Technically, Merck shares appear to have spiked to a new 52-high of about $84.34 before pulling back slightly to settle at $82.38. However, the bull-run seems set to continue, with the current 20-year high of about $87.25 set in December 2019 within reach. 

Looking further back, Merck’s current all-time high of $94.88 set in 2001 could also be achieved. As a result, investors could target extended gains at approximately $85.04 or higher at $87.86.

On the other hand, $79.47 and $76.59 are crucial support zones.

Merck’s bull run set to continue

In summary, although Merck shares spiked more than 9% on Friday, the current bull-run seems poised to continue amid increased optimism towards its molnupiravir drug.

Moreover, the MRK stock still trades at an attractive forward P/E ratio, making it a compelling option for value investors.

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