Merck is one of the largest pharmaceutical companies in the world. It has a strong product line-up in cancer, cardiometabolic diseases, pediatric diseases, and vaccinations. Merck has a pipeline of drugs that are slated to arrive in the future, and it has also established a presence in animal health which provides steady growth. Merck, being one of the big pharma companies, has pricing power and scale. Its long-term prospects look bright.

Merck’s long-term monthly chart shows a 10-year long uptrend that made higher tops and higher bottoms till about 2020. The first three months of 2020 saw the price fall by about 30% and temporarily come close to the bottom of the long-term trend. The price recovered by April 2020 and has since found support a few times near the $69.5 level. Most recently, the price had risen to $90 before pulling back and finding support at the bottom of the long-term trend. A reversal is playing out, and a retest of the $90 level is likely. A stop-loss can be placed at $73 below the bottom trend line.

Position entered into our long-term tracking portfolio today. Entry point at $80.44 and stop-loss at $69.10, 14% below the entry point. The short-term to medium take profit at $69.11, giving a potential profit of 12%.