A "Conflicted" B of A/Merrill Reiterates "Buy" Rating On Merck; Target Upped To $62

First, good news, to be sure. [Link to Wall Street affiliated news source this morning.] But from a bank that seeks -- and regularly wins -- a lot of business from Whitehouse Station. Truth told.

I do believe the B of A analysts are all complying with their SEC Reg AC duties, to be clear (i.e., I do believe they actually do "believe in" the rating and target they assign). But the conflicts here are palpable. Even so, the latest target represents only about a 7 per cent bump -- from last night's NYSE closing price. So, we may fairly infer, factoring in this "embedded plus factor" -- a bank-wide desire to win and keep bond underwriting business -- that B of A sees Merck as essentially fully valued here. Or at least fairly valued.

Merck will have a solid 2014, with a strong buyback program still in place, and the groundwork laid for tax efficient repatriations. . . Merck essentially has a cash vault open, from the EU to the US, this year. So, I do think a $62 handle is solidly believable -- over the next 12 months.

But not tomorrow morning; and not this month. Let's see Q1 results. And let's see what currency headwinds are doing to the sales line -- and get a bead on whether Merck is aggressively hedging that exposure -- at the sales line. Have a great day, one and all -- my daylight duties call.