Things are starting to look up for pharmaceutical concern Merck & Co Inc. one week after the company announced that it had acquired Imago Biosciences (IMGO) (NYSE:MRK). After reaching a high of $108.90 earlier today, the share price has reached its sixth consecutive all-time high. MRK is currently in the lead with a year-to-date percentage of 41.4% after trading at $108.56 after a recent increase of 1%. On the other hand, traders who have a bullish outlook should keep their foot on the gas because there is evidence from the past that indicates the equities still have a lot of room to run.
Merck Stock Recently High Signals
Recent highs in Merck stock have happened during historically low implied volatility (IV) periods for the company, which has traditionally been a bullish combination for the stock. Rocky White, a senior quantitative analyst at Schaeffer’s, discovered four instances similar to the one in which the equity was within 2% of a 52-week high while Schaeffer’s Volatility Index (SVI) was in the 20th annual percentile or lower.
These instances occurred when the equity was trading at a low volatility time. This is seen by MRK, which has an SVI of 19%, significantly more significant than the average of merely 7% of readings taken over the previous year.
After further research, it was discovered that the investment generated an average return of 17% after three of those signals. A similar rise would put Merck stock at approximately $110.40 if it continued to be priced where it is presently sitting.
The consensus among market watchers is that the blue-chip stock will continue to perform well; nevertheless, there is some wiggle left for possible price target increases and upgrades. More specifically, five of the 16 analysts covering MRK have a “hold” rating. In addition, the average price goal for the next 12 months is $110.35, which is only a 1.7% premium to the current level.
It is also important to note that the securities have an 88 out of 100 ranking on Schaeffer’s Volatility Scorecard (SVS), which indicates that the equities have outperformed the expectations of options traders regarding their volatility over the past year.
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Author Valerie Remorosa 
