J.P. Morgan Adjusting Estimates On Merck & Co

According to J.P. Morgan, Merck & Co MRK and JNJ announced a settlement on the Remicade / Simponi arbitration on Friday. J.P. Morgan reported that under the revised terms of the agreement, MRK will relinquish rights for roughly 30% of the current franchise and will accelerate the move to a 50/50 profit split in the remaining JV'ed territories. “We are updating our estimates to reflect these revised Remicade economics, partially offset by our assumption of incremental cost cutting initiatives by Merck. Remicade arbitration has represented a substantial overhang on MRK shares and we view Friday's outcome (particularly the company's ability to maintain 2011 guidance) as a clear positive for the stock. We view Merck's execution on its 2011 guidance targets (particularly topline), 2H/11 pipeline updates and potential capital deployment initiatives (accelerated repo, dividend increase, etc) as catalysts for the stock.” Merck & Co closed yesterday at $34.51.