Thursday, July 20, 2006

Notablecalls - Paperstand

Barron's Online discusses Merck (MRK), saying that driven by new drugs, recent court victories and a hike in earnings ests, the stock has jumped 40% since hitting a 10-year low in Oct. Sure, Merck faces thousands of lawsuits over the safety of Vioxx. Sales of the cholesterol drug Zocor are plunging. And Wall St. remains unconvinced that Merck's profits will start climbing again in '07, as CEO Richard Clark promised in Dec'05. But with consensus earnings ests falling below the co's guidance, Wall St. does not fully appreciate Merck's positives, such as new products likely to generate bigger than expected sales and cost cuts. "The street has massively underestimated Merck's underlying fundamental improvement," says Jami Rubin, of Morgan Stanley. "Earnings expectations have steadily risen. Business trends are better. Plus, the pipeline has performed better than expected." "I see upside if this co hits its targets," she adds.

According to the Barron's Online, value connoisseur and billionaire investor Carl Icahn sees the light at Vector Group (VGR) and has been buying up tarnished shares of the discount tobacco manufacturer. Icahn paid $5.06m for 320K Vector shares within the past month, acquiring shares in the open mkt for the first time since winter '02. The purchases increased Icahn's holdings to 11m shares, or 22% of Vector's 49.9m outstanding shares. Last month, Icahn received 1.2m shares when Vector redeemed 6.25% convertible notes due in Jul'08. This included a gift of 262K shares as an incentive to do so. Ben Silverman, director of research at, says Icahn's "buying is certainly interesting in that he just picked up a decent swap of stock by converting notes and now he's back buying on the open mkt."

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