Ticker Reports for February 10th
Merck: 4 No-Brainer Reasons to Buy This Dip
Big pharma has come under a lot of scrutiny from regulators and consumers as sentiment sours on the industry. As such, the market can be unforgiving when companies even slightly miss expectations or forecasts. This is the case with Merck & Co. Inc. (NYSE: MRK), as shares lost over 10% after reporting its fourth quarter of 2024 earnings results.
While the company reported a solid EPS beat by 11 cents as revenue rose 6.8% YoY to $15.62 billion, beating consensus estimates for $15.48 billion, it was the 2025 guidance that shook investor’s confidence. Merck guided EPS of $8.88 to $9.03 versus $9.13 consensus analyst estimates and revenues of $64.1 billion to $65.6 billion, which also fell short of consensus estimates of $67.07 billion.
The drop can be seen as a buying opportunity for the medical sector giant. Here are 4 no-brainer reasons to buy this dip in Merck stock.
1) Guidance Shortfall Was Due to a Deliberate Pause in Shipments to China
The whole of the top and bottom-line guidance shortfall can be attributed to Merck’s deliberate decision to pause shipments of its Gardasil to China from February to mid-2025.
Gardasil is its human papillomavirus (HPV) vaccine, which is used to prevent diseases and cancers caused by HPV. Gardasil sales in Q4 fell 17% YoY to $1.55 billion, which missed analyst estimates of $1.61 billion. For the full year 2024, Gardasil generated $8.6 billion in sales, down 3%.
The reason for the temporary shipment halts is to give the market a chance to work through its inventory in China and allow distributors to adjust inventory to demand. This obviously indicates a demand issue, but Merck insists that growth will resume in the second half of 2025. Gardasil dominates the market for HPV vaccines but still faces competition from GSK plc (NYSE: GSK) bivalent HPV vaccine Cervarix.
2) Merck’s Pipeline of Drugs Is Worth More Than $50 Billion
In its Q4 conference call, Merck CEO Rob Davis stated they have 20 potential new pipeline treatment growth drivers, almost all of which have blockbuster growth opportunities. Some of these include their adult pneumococcal conjugate vaccines WINREVAIR and CAPVAXIVE, now launching in the United States. Merck has many promising treatments in Phase 3 development. In fact, Merck has tripled the number of drugs in late-stage Phase 3 development in the past three years. Davis stated, “Based on the significant progress, we see over $50 billion of potential revenue opportunity from these programs.”
3) Merck Stock Presents a Value At These Levels
After the 10% price drop, Merck stock now trades at just 11.45x forward earnings compared to the industry average of 30.22x. Its trailing 12-month (TTM) price-earnings (P/E) ratio at 18.29 is below its 10-year median P/E of 25.36. Its price-to-sale (P/S) ratio is 3.45 compared to the industry average of 4.31. Its stock pays a 3.71% annual dividend yield with a strong debt-to-equity ratio of 0.79 and an A+ credit rating for its fortress balance sheet, generating a TTM operating cash flow of $18.26 billion. Shares are trading 35.3% off their highs, 37.91% off their consensus analyst price target, and at three-year lows.
4) MRK Stock Is Nearing a Triple Monthly Support Level
A triple support is comprised of three overlapping levels of trendlines, bumpers or indicators. Wider time frame charts tend to have firmer price levels.
MRK’s monthly candlestick chart illustrates a sharp decline from its highs. The stock is nearing a triple price level support. The three support levels converge around the $86.02 to $85.48 level, followed by another double support at the $83.05 to $82.56 level. The first triple support level is comprised of the lower tails trendline extension (purple), price support at $86.02 (green), and the monthly anchored VWAP support at $85.48 (orange). The second level of double supports is at the $86.02 support (green) and the $82.56 Fib 0.076 support (light green). The whole support cluster range is between $82.56 to $86.02.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered call at upside Fib levels executes a wheel strategy for income in addition to its 3.71% annual forward dividend yield.
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Buy NVDA Now?
After weeks of volatility, did President Trump just turn Nvidia (NVDA) into a raging BUY?
The beloved chipmaker has struggled this year, facing increased competition and regulatory pressure.
Ackman Announces Major Stake in Uber: Should You Follow His Lead?
Recent breaking news gave Uber (NYSE: UBER) investors a welcome boost as the stock swung into positive territory over the past year. The ride-hailing giant, which had significantly underperformed over the previous year, surged 6.59% on Friday and over 11% for the week following its Q4 2024 earnings report. However, what truly drove the stock’s sharp rally was not its earnings. It was a revelation from famed investor Bill Ackman.
The billionaire hedge fund manager and founder of Pershing Square took to X (formerly Twitter) to announce that his firm had built a significant position in Uber, which sparked renewed investor enthusiasm. Given Uber’s recent struggles, should investors consider following Ackman’s lead despite its lagging performance relative to the broader market over the past year?
Bill Ackman Reveals Investment in Uber
On Friday, Bill Ackman revealed that Pershing Square had amassed a substantial stake in Uber, asserting that the stock is still trading at a “massive” discount. According to his post on X, his fund began accumulating shares in early January and now holds 30.3 million Uber shares, valued at nearly $2.3 billion based on Friday’s closing price.
Ackman expressed his confidence in Uber’s management, calling it one of the best-run businesses in the world. He highlighted that the stock remains significantly undervalued despite its quality, an unusual characteristic for a large-cap company. Uber shares responded positively to the news, surging over 6.5% on Friday. Just days earlier, the stock had taken a hit, dropping over 7% following softer guidance and an earnings miss.
Ackman also disclosed that he had been a day-one investor in Uber through a small venture fund investment and praised CEO Dara Khosrowshahi’s leadership. He credited Khosrowshahi for transforming Uber into a highly profitable and cash-generating company.
Uber’s Recent Earnings Disappointment
Despite the stock rallying in 2025, with gains of nearly 25% year-to-date after declining 2% in 2024, Uber’s recent earnings report failed to impress investors. The company reported lower-than-expected operating income, raising concerns about its near-term financial performance. At the same time, there is increasing speculation about how self-driving technology could impact Uber’s business model.
Uber’s stock initially dipped after the earnings report as investors worried about the competitive threat of robotaxis. Companies like Waymo and Tesla are making significant advancements in autonomous vehicle technology, which could either disrupt Uber’s operations or present an opportunity for the company to expand its platform. Uber is taking proactive steps to integrate autonomous vehicles, investing in infrastructure, developing new app features, and partnering with companies like Waymo in Austin. CEO Dara Khosrowshahi acknowledged the uncertainty but emphasized that Uber is working hard to be prepared for the future.
Uber’s Growth Trajectory Remains Intact Despite Earnings Miss
Uber’s earnings report showed mixed results. Operating income for the December quarter rose to $770 million, but this figure was well below the $1.19 billion analysts had expected. Net income significantly jumped to $6.88 billion, mainly due to a tax valuation release. Gross bookings, the total value of transactions on Uber’s platform, increased by 18%, which was stronger than anticipated. As a result, Uber’s revenue, which is derived from those bookings, grew by 20%.
Uber has set its gross bookings forecast between $42.0 billion and $43.5 billion for the current quarter. Analyst expectations were closer to the higher end of that range. The company also projects adjusted earnings of between $1.79 billion and $1.89 billion, which aligns with Wall Street estimates.
Bill Ackman’s Investment Boosts Market Sentiment
Despite Uber’s underperformance in 2024 and the recent earnings miss, overall sentiment toward the stock remains positive. Among 36 analysts covering Uber, the stock holds a Moderate Buy rating, with a consensus price target suggesting over 20% potential upside. The stock’s technical outlook has also improved following Ackman’s investment disclosure.
It recently broke out of a short-term downtrend, which could indicate the start of a new upward movement. If Uber’s stock can pull back toward its 200-day simple moving average and establish support above it, a higher low formation could confirm a longer-term uptrend.
With Uber already up 23.6% in 2025, momentum may be shifting in its favor.
Bill Ackman’s endorsement of Uber has added a new layer of optimism, reinforcing confidence in its long-term growth potential. While recent earnings were mixed and concerns around autonomous vehicles persist, Uber’s strategic positioning, improving profitability, and strong backing from major investors like Ackman suggest that the stock may have more room to run.
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Wells Fargo Upgraded These 3 Stocks—Here's Why They Stand Out
Now that the first quarter of 2025 is underway, investors across the board are probably looking to find the best ideas to get their portfolios started on the right foot. This way, they can have not only the momentum but also the liquidity necessary to chase the growth plays that will become available in later months. In order to find these sorts of plays, they can use a powerful tool in today’s market.
This tool has been used by Wall Street analysts on certain stocks in recent rating changes. Today, as the first quarter earnings results become available, Wells Fargo analysts have decided to share their optimistic views on a select list of stocks, ones that carry enough momentum and fundamental tailwinds to get them into capital gains territory.
Included in this list of upgrades are names like Spotify Technology (NYSE: SPOT) due to the safety of its subscription-based business model or a flip into the energy sector through shares of Marathon Petroleum Co. (NYSE: MPC) to fit in the bullish narrative for oil this year. Finally, a consumer staples name offering stability in this volatile environment is found in Clorox Co. (NYSE: CLX).
Why Spotify Deserves Its New Ratings
Even though Spotify stock already trades at its 52-week high, these Wells Fargo analysts still see a path for it to deliver further upside. While the market is scrambling to figure out the economic effects of new trade tariffs, Spotify’s business model remains relatively immune to this theme.
That is why analysts felt comfortable reiterating their overweight rating on Spotify stock as of February 2025 and placing a $690 per share valuation on it. This new valuation would not only call for a new 52-week high for the company but also a net upside of as much as 11% from where it trades today.
Apart from this new optimistic outlook from Wall Street, investors can count on undeniable momentum in the stock, which delivered a run of up to 160% over the past 12 months alone. This momentum and the further upside left in Spotify stock would explain why institutional buyers from Amundi decided to accumulate up to $359.8 million worth of the stock as of February 2025.
More than that, a final gauge through market sentiment can be taken by investors looking to justify their potential buy thesis on Spotify stock. Apart from momentum and price action, Spotify stock trades at a 104.8x price-to-earnings (P/E) ratio today, a steep premium to the business sector’s 35.8x average valuation.
While some may call this expensive, seasoned investors and traders know that the market will always pay a premium for the stocks it believes will outperform in the coming months.
A Buffett Bet Is Always a Good Bet
There’s a reason why Warren Buffett decided to buy up to 29% of Occidental Petroleum Co. (NYSE: OXY) in recent quarters. He understands the commodity must catch up to the price action seen in gold and other energy commodities.
More than that, Goldman Sachs analysts have also recommended oil as a potential outperformer in 2025, just like Paul Tudor Jones did in a recent CNBC interview. Regarding Marathon Petroleum, buyers from Amundi also found this stock a reasonable buy during the shifting economic winds.
This is why they also boosted their holdings in the company by 194.2% as of February 2025, bringing their net position to a high of $398.4 million today, another bullish factor for retail investors to lean on for their potential portfolio additions.
This theme would also explain the recent overweight rating from Wells Fargo analysts, which came with a $183 a share valuation and called for up to a 22% upside from today’s stock price.
Steady Dividends in Clorox: A Tradeoff For a Smooth Ride
While recent Wells Fargo analyst targets for $161 per share on Clorox stock might not be the highest ceiling in this list, calling for only 8.5% upside from today’s stock price, investors can find further safety in the company’s business model, which enables management to keep paying up to $4.88 per share via dividends.
At today’s price, this payout would translate into an annualized yield of 3.3% to beat the inflation rate in the United States economy. Backing up the growth in Clorox stock for the months to come is the current Wall Street forecast for earnings per share (EPS) for the next 12 months, shooting for $1.91 per share, a significant boost from today’s $1.55 level.
Be that as it may, Amundi buyers were spotted once again buying this safety and income name to cushion today’s volatile market. They have now accumulated up to $185.8 million worth of the stock as of February 2025. After a recent earnings decline to 87% of its 52-week high, the stock is now an undeniable dip-buying opportunity to carry investor portfolios into the green this coming quarter.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...
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