Toronto, Forgot how bad the entire sector was. I just remember having a couple of clients that made a killing shorting MO most of the way down. You might be right with MRK, but there will definitely be some negative press for months to come. and I would be shocked if it sees 30 before 20. Luckily I don't hold anything for more than a couple of hours so I won't have to worry about where it ends up. Good luck.
All trading profits aside this sucks so bad, you know how many drugs will not be developed because of this shit! We all lose big time. There need to be some caps on these things. 24 million was enough, the 200+ million is ridiculous. This is not a cigarette company that puts out a product that kills people and nothing else, this is a company that puts out stuff that for the most part helps people. If there was intentional negligence that is one thing but when the problems didn't show up in the trials then that is another thing altogether. If there was a problem with the trials then the FDA should have caught it and that is what should mitigate the damages, the fact that the FDA has initial oversight and review. At this rate it is no wonder that the rest of the world is pulling ahead of us, we have a president who doesn't believe in science and wants to hamper it at every turn(even Frist split with him about that) and we have a litigious society that wants to win the freakin lottery at everyone else's expense. Well, I guess that we are all too busy shopping in our malls and stuffing our faces to pay any attention. Laugh and enjoy countrymen, Rome is burning.
MARKETS advertisement E-MAIL SIGN-UP Find out the latest market movements and trends in our e-mail alerts. Check the boxes below to subscribe. Trading Shots The Morning Brief The Afternoon Report The Evening Wrap Heard on the Street To view all or change any of your e-mail settings, click to the E-Mail Setup Center COMPANIES Dow Jones, Reuters Merck & Co. Inc. (MRK) PRICE CHANGE U.S. dollars 28.06 -2.35 4:02 p.m. * At Market Close RELATED INDUSTRIES ⢠Pharmaceutical & Biotech Personalized Home Page Setup Put headlines on your homepage about the companies, industries and topics that interest you most. Analysts React: Vioxx Verdict August 19, 2005 6:08 p.m. Merck took a hit Friday, with shares slumping 7.7% after the company was found negligent in the death of a man who used Vioxx, a painkiller taken by more than 20 million Americans before it was withdrawn from the market last year. Analysts agree that the verdict is a major negative for Merck and will tarnish the company's reputation as it faces more litigation. But some point to Merck's appeal of the decision and are less concerned about its impact on future cases. * * * The fact that Merck lost, and that the award was sizable, will likely energize the plaintiff's bar and will increase the frequency at which the company gets sued. Investors should prepare for a multiyear legal battle. Quantifying Merck's total liability still largely remains an exercise in futility in our opinion, but we continue to feel that the dividend is safe, at least in the interim. -- Prudential analyst Tim Anderson, who has a "neutral" and $34 price target on Merck * * * We believe the number of lawsuits filed against the company will increase dramatically in the coming months, given the large award for the plaintiff and the short time to deliberate, putting the company at greater risk for additional litigation. Notably, the courtroom was filled with plaintiff attorneys from other cases when today's decision was rendered, and evidence from this trial may be used in subsequent cases. -- David Moskowitz, analyst with Friedman Billings Ramsey, who rates Merck at "underperform" with a $27 target * * * We do not think investors should apply this ruling to the thousands of cases Merck faces. This is because: 1) the trial occurred in a particularly plaintiff-friendly jurisdiction. 2) the plaintiff's attorney, Mark Lanier, was quoted after the verdict stating that the state of Texas punitive-damages cap would likely reduce the $229 million punitive award. 3) The ruling could be overturned on appeal, or the award amounts could be reduced significantly. -- Merrill Lynch analyst David Risinger, who rates Merck "neutral" * * * The punitive damages are most curious as Texas law limits punitive damages to [two times] economic impact, plus up to $750,000. Additionally, Merck was ruled to have a design defect, to have given insufficient instructions, and Vioxx was ruled to be unreasonably dangerous. Merck has already initiated the appeals process, which could delay a resolution for several years, and will likely reduce the financial damages significantly. Furthermore, Merck reiterated its intent to defend and litigate each upcoming Vioxx case. -- Deutsche Bank analyst Barbara Ryan, who rates Merck "neutral" and has a $31 target on the stock * * * Around late September, Merck should release one-year follow up data ⦠to answer whether the increased [cardiovascular] risk observed lingers after stopping Vioxx therapy. Our general belief is that the likelihood of such is low, but if [cardiovascular] risks remain, we believe Merck's incremental Vioxx exposure would be very high. -- UBS analyst Carl Seiden, who rates Merck "neutral" with a $33 target --Compiled by Worth Civils ⢠Prudential Equity Group listed no specific disclosures related to Merck. ⢠Friedman Billings Ramsey listed no specific disclosures related to Merck. ⢠Merrill Lynch says one or more analysts responsible for covering the securities of Merck owns such securities, and the firm acts as a market maker for the securities. The firm has received compensation for investment-banking services from the company within the past 12 months, and expects to receive or intends to seek further compensation within the next three months. ⢠Deutsche Bank owns 1% or more of any class of common equity securities of Merck. ⢠UBS makes a market in the securities of Merck and may hold a significant non-equity financial interest in this company. The firm has acted as manager/co-manager in the underwriting or placement of securities of the company within the past three years, and within the past 12 months, the firm has received compensation for investment-banking services. http://online.wsj.com/article/0,,SB112448637613418493,00.html?mod=home_whats_news_us
Here is my take. You have to ask yourself what was the market expecting? And I think it was expecting a guilty verdict. By just reading the WSJ articles concering the trial, anyone could tell that it wasn't going well for MRK. Based on this point alone, I don't see much more downside. Alot will depend on what the street analysts say on monday. And I'm not convinced like Cramer that there will be massive downgrades. Vioxx liability has been well known for some time. Outsized jury damage awards are common, just look at the WYE cases. Of course the stock had priced in a chance for dismissal, and thats the reason it declined today. In order for this stock to hit 25, institutions will have to liquidate in mass. And I just don't think this news is unexpected enough to cause that.
I was watching the MRK Sept 30 calls during MRKs 2nd leg down of the day, into the close. It was odd, they ramped the IV and held .40 like there was no tomorrow - huge size bought .40 As MRK plummeted even further it dipped to .30 but was supported well there and some more .40 prints went through. It closed .30 x .35 I'm curious who loaded up at .40? I don't have options T&S going that far back in the day. Either people covering the calls they sold earlier, people hedging their huge short stock positions, or a big specualtor(s)?
The liberal lawyers and the liberal judges and the "gamed" juries only scare the best and the brightest away. Expect future advancements in drugs from countries that don't have liberal lawyers and judges...
Texas limits punitive damages in cases arising after September 1, 1995, to (a) two times the amount of economic damages, plus (b) an amount equal to non-economic damages (not to exceed $750,000) or $200,000, whichever is greater. Tex. Civ. Prac. & Rem. Code Ann. § 41.008. Maximum punitive damages in this case is 1.65MM http://news.public.findlaw.com/injury/ap/o/624/08-19-2005/df900006965c5f10.html