Friday, October 29, 2010

Certainly Looks Like $37 Is "Fully Valued": Goldman Sachs; and Jefferies & Co.

I'd say that, with Merck trading just over $36.20 at midday on the NYSE (on the less than stellar Q3 results -- sales a little light), these bankers called it just right -- Jefferies & Co, and Goldman, Sachs & Co. [But so did I, too -- several months before the calls made by these two.]

. . . .Goldman, Sachs & Co. is. . . suggesting buying puts on Merck as a hedge to long shares through the company's arbitration process.

The analyst believes that the stock is already pricing in a favorable outcome for Merck, noting that options prices are at a three-year low, which makes them a good way to hedge the overdone shares.

The analyst suggested buying the November $35 put for $0.59 on new positions and rolling the previously long Oct. $36 put at this time, which was previously suggested as a long hedge. . . .

Indeed. And we'll have to wait until 2011 for the J&J arbitration answer, most likely.

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