Smith Barney Still Sees Risk to Merck, Pfizer

Last week's regulatory triumphs at Merck and Pfizer do not eliminate the legal risk to either company, Smith Barney argued in a research note Monday.

The brokerage warned that it sees "little upside" for either after both rallied on votes to clear Merck's Vioxx and Pfizer's Celebrex and Bextra for continued sale in U.S. prescription drug markets. Merck added 13% on the ruling and was recently changing hands at $32.52 on Instinet, while Pfizer added 6% and currently fetches $27.

"While the panel's vote on Vioxx might marginally improve the litigation picture, Merck's stock appears to be discounting minimal (if any) litigation risk," Smith Barney wrote. "Vioxx litigation will likely continue to create volatility to the Merck story as a steady stream of cases go to trial in 2005."

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