Analyst Sees Merck Losing Vioxx CaseAug 16, 2005 | www.cbsmarketwatch.com
The odds are against Merck & Co. prevailing in a wrongful-death civil lawsuit over Vioxx currently being tried in Texas, an analyst at Prudential Equity Group says.
In a research note released early Tuesday, Prudential analyst Timothy Anderson said that a verdict in the case could be rendered by the end of the week. It's the first Vioxx-related lawsuit to come to trial.
The plaintiff in the case has alleged that Whitehouse Station, N.J.-based Merck's Vioxx contributed to the sudden death of a man in Texas who had been using the drug for about eight months.
"We think the odds are against Merck, and that that share price could contract more than 5%, but less than 10%, if a sizable award is meted out against the company," wrote Anderson, who has a neutral rating on the stock.
Conversely, Anderson said that a victory for Merck (MRK: news, chart, profile) would likely raise the stock price by the same percentage range.
Anderson added that any selling in the stock tied to a losing verdict might also create a trading or buying opportunity, in light of Merck's dividend yield of 5% and prospects for its product pipeline.
Merck abruptly pulled Vioxx from the market last fall after a clinical trial linked the pain reliever to an increased incidence of heart attack and stroke in certain long-term users.