MRK Stock Price: Merck & Co, Inc set to bounce amid robust earnings, though blue wave poses a risk

Markets are focused on coronavirus, but other diseases still grip the world – and Merck & Co., Inc.(NYSE: MRK) is set to benefit once the storm subsides. Shares of the New Jersey-based pharmaceutical giant have been on the back foot, falling by 1% on Tuesday. This slide is in line with the broader S&P 500 and other indexes, which are grappling with the spread of COVID-19 in Europe – and also in the US. The seven-day rolling average has surpassed 70,000 cases in America.

Merck and Co has been out of the spotlight in recent months, as other firms stood out in racing for a covid vaccine or therapeutics. However, the company still reported an increase in drug sales, mostly driven by a lung cancer immunotherapy treatment called Keytruda. Income from this medication jumped by 21% to $3.7 billion, beating estimates. 

Moreover, MRK has upgraded its forecasts, saying it now projects a full-year adjusted profit of $5.91-$6.01 per share, with the bottom end of the range surpassing the previous top of the range – $5.78. The earnings report should help Merck weather the current market storm and push its shares higher.

On the other hand, the elections pose a risk to the pharmaceutical sector. Democrats have high chances of winning not on the White House but also the Senate. A President Joe Biden and with dominant Senators such as Bernie Sanders and Elisabeth Warren could work to lower drug prices. While Dems' priorities are first and foremost fiscal stimulus, they could reform healthcare later on, potentially weighing on pharma firms. 

MRK Stock Forecast

NYSE: MRK has been sliding in the past month, and seems to have reached critical support at around $78.

It hit the same level last week and an attempt to break above $80 failed for now. The round $75 level is the next one to watch on the downside. Above $80, the next upside target is $83.