March 14, 1999. Merck is the #1 drug maker in the US and is tied for first in the world with Glaxo Wellcome in prescription drugs. The company develops products for both humans and animals; almost two fifths of its sales come from treating ailments associated with American eating habits-high cholesterol drugs.

In addition, Merck has the top-selling US drugs for hypertension (Vasotec, Prinivil), as well as newer, promising drugs such as Crixivan (AIDS treatment), Propecia (for male baldness), and Maxalt (for migraine headaches).

Also under development is a new arthritis drug, Vioxx. In the past 12 months, their sales and income are leading the drug industry and the company is growing at a 14% rate and beating out the competition. Its income is at 13.7% and also beating out the numbers at other drug companies.

How profitable is the company? Investors expect the company to grow at a steady pace to keep up with the price's of the stock and of course to increase its value. Isn't that why investors want to buy the stock? Merck's one year profit margin is 19.5%. According to current multiples, by the end of 1999, the price of the stock should be between $94 a $98. By end of year 2000 the price should be between $103.75 and $111.10, a gain of 14.35% and 29.26% respectively.

By most estimates on the high side and low side, the analysts covering Merck maintain a high confidence level. My own personal thinking on Merck, it is a strong buy!

George