Morgan Stanley downgraded Merck & Co. (MRK) to equal-weight, from overweight.
Analyst Jami Rubin says she's downgrading Merck after the drugmaker announced it's terminating MK-767, a dual PPAR (peroxisome proliferator activated receptor) agonist for the treatment of diabetes. She notes MK-767 was considered one of the most promising drugs in Merck's late-stage pipeline. Evidence of cancer was found in mice during the late-stage trials.
Rubin views this news as the "last straw" after a series of recent setbacks. Last week, Merck scrapped its plan for a depression medicine after it proved ineffective in clinical trials.
She cut the $53 target to $51. Rubin sees $2.94 2003 earnings per share, $3.24 in 2004, and $3.52 in 2005.