Drug stocks show strength on volume (PFE)

Posted in General 
June 19th, 2009

Large drug stocks are testing four-month highs in early trading this morning, and are among the strongest stock groups.

Most of the big names in the group including Pfizer (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Eli Lilly & Co. (NYSE: LLY) and Abbott Laboratories (NYSE: ABT) all are trading higher in the early going.

One of the stocks to watch could be Merck & Co. (NYSE: MRK), which has lagged its peers’ relative strength in recent sessions. It has further to go to challenge its June highs, vs. most of its peers.

While Merck has not enjoyed very strong analyst sentiment even compared to its large drug stock peers, it stands out based on relative valuation, trading at about 8 times forward 12-month earnings expectations, vs. more than 10 times for peers such as JNJ and ABT.

It may benefit most from the positive group sentiment.

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