Analysts’ Upgrades: MRK's green light on drug; PMO explores oil

As expected, analysts adjusted their targets on Dentsu (TYO:4324), a Japanese advertising and marketing company following its announcement of a takeover bid for Aegis Group PLC (LON:AGS). With a high probability of the deal closing there might not be too much of an incentive for investors currently looking into Aegis Group. Dentsu however might be of interest if you are searching for a multinational company within the advertising and marketing space. Dentsu’s stock price fell 7 percent on the takeover news. This merger however creates one of the world’s largest ad companies, with its main competitors being WPP Plc (LON:WPP) and Omnicom Group (NYSE:OMC).

Merck & Co (NYSE:MRK) was upgraded by several analysts last week.Target prices were increased by an average of 5.5 percent after Merck & Co got a green light to proceed with one of its clinical trials. Merck now expects to seek outright approval of its Odanacatib drug in the US, the European Union and Japan in the first half of next year. Receiving a go-ahead for drug testing (in the form of clinical trials) with the outlook for outright approval thereby moving one step closer is vital for companies within the pharmaceutical industry and can significantly affect stock performance.  Merck shares gained 4.7 percent during last week and are currently trading at a 52-week high, with analysts signalling an upside potential of  approx. 2.5 percent.

Last week Premier Oil (LON:PMO) signed a deal to pay USD 1 bn for 60 percent of an oil exploration license in the Falkland Islands held by Rockhopper (LON:RKH). This is seen as a risky step for Premier Oil as the Falkland Islands have been the centre of a dispute between Argentina and Britain for many years. Oil has been a heated discussion within Argentina after its government nationalised YPF last April. Premier Oil estimates the deal to add roughly 200 million barrels to its resources, with the prospect of 175 million more, and that the oil could start pumping in 2017. Analysts seem to have seen this as a positive scenario for Permier Oil’s stock as they pushed their targets up by 3.3 percent during the week, and believe the stock has an upside potential of 35 percent. 

Analysts weren’t positive to the same degree as they were negative during the week. However, there are a few other stocks worth listing that saw analysts' appraisals:

For additional details about these stocks, take a look at Saxo Bank’s Equity Research offering here.

For news about the latest downgrades see my colleague Matt Bolduc's post: Analysts Downgrades: Supervalu = junk, cyclicals downgraded

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I write about the previous week's analyst upgrades and downgrades every week on TradingFloor.com. If you'd like to be notified with an email whenever a new story is posted, become a member of TradingFloor.com - it's free, and you can sign in with Facebook, Twitter, LinkedIn or Google - and follow the tag "Broker Rating Changes."  You can also bookmark our upgrades/downgrades page.