Merck, a pharmaceutical giant and component of the Dow Jones Industrial Average, reported quarterly earnings before the open on Friday and gapped lower on Friday, and again today. From its close of $61.99 on Thursday to its open on Monday of $55.75 the stock crashed by 10%, which set this stock to the “earnings woodshed.’
Pfizer reports its quarterly earnings before the opening bell on Tuesday, and this pharmaceutical giant, which is also a component of the Dow, is down slightly since setting its postelection high of $36.78 on Oct. 23. This stock is a member of the “Dogs of the Dow” for 2017.
Merck’s woes stretch beyond U.S. boarders, as the company withdrew an application seeking approval for further action on a lung cancer drug in Europe. Merck has an elevated P/E ratio of 33.51 and a dividend yield of 3.30%. Merck was one of the “Dogs of the Dow” for 2016, not in 2017, but it may qualify again in 2018.
Analysts expect Pfizer to earn 64 cents a share when they report. Pfizer has a more reasonable P/E ratio of 26.09. Its dividend yield of 3.76% would keep the stock as a “Dog of the Dow” in 2018.
Merck (MRK) opened Monday at $55.75 down 5.3% year-to-date and set its postelection low of $54.41. The stock is in correction territory, 16.5% below its postelection high of $66.80 set on March 1.
The weekly chart for Merck is negative with the stock below its five-week modified moving average at $61.39. The stock ended last week below its 200-week simple moving average at $58.52, putting the stock below its “reversion to the mean.” The 12x3x3 weekly slow stochastic reading is projected to decline to 40.30 this week, down from 49.50 on Oct. 27.