Merck & Co. Inc. (NYSE: MRK) reports on Tuesday morning comes into earnings with shares up only 2.7% or so year to date, and up only about 1.7% from a year ago. Thomson Reuters has consensus estimates of $0.81 in earnings per share (EPS) on $9.8 billion in revenues, down from the same quarter a year ago of $0.85 EPS and $10.9 billion in revenue.

This stock has been hit hard since printing a high in late January. Although it has rallied back smartly, it still may be offering new investors a very good entry point. The company’s numerous prescription medicines, vaccines, biologic therapies and consumer care and animal health products are provided to customers in more than 140 countries.

Merck is the world’s fourth-biggest drugmaker by revenue, and it boosted its annual profit forecast after the company beat first-quarter earnings and sales estimates, fueled by higher demand for vaccines and diabetes treatments.

Recently analysts feel that the gains given back after industry conferences were unwarranted, and they expect the stock to move higher as Keytruda ramps. This drug was approved last year for treatment of patients with advanced or unresectable melanoma who are no longer responding to other drugs.

Credit Suisse also sees some solid upside in big pharma in the coming years. After the healthcare sector has made a strong run, this firm believes that it can continue, based on a strong pipeline across the sector. The brokerage firm updated its autoimmune market model and it sees implications for all the large cap U.S. pharmaceutical companies in its coverage. Based on multiple conversations with physician experts and companies active in the space, Credit Suisse sees the U.S. autoimmune market growing to $30 billion by 2025, up from $20 billion in 2014.

Analysts had this to say ahead of earnings:

• Piper Jaffray initiated coverage with a Neutral rating and a $65 price target.
• Credit Suisse reiterated a Neutral rating with a $62 price target.
• Jefferies has a Hold rating and raised its price target to $66 from $63.

For the July 15 settlement date, Merck saw short interest decrease to 29.47 million shares from 32.69 million in the previous period. The previous reading is the second highest in the past 52 weeks.

Merck shares were down 1.2% at $56.72, the consensus analyst price target is $65.47 and the 52-week range is $52.49 to $63.62. The company has a 3.1% dividend yield. Merck’s market cap of $160 billion and the company is in a position that it could possibly decide to break itself up in the years or quarters ahead even if it is still enjoying the benefits of its Cubist acquisition.

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