Merck and Coke Fall as Analysts Change Opinions

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

As the government shutdown continues and we draw ever closer to the debt ceiling, the markets continue to rally on hopes of a compromise in Washington. As of 1 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is higher by 96 points, or 0.64%, while the S&P 500 has risen 0.56% and the NASDAQ is up 0.78%. Within the Dow, there are currently only seven losers at the time of writing, while the other 23 components are gaining. Let's take a look at two of the big downers.

Shares of Merck (NYSE: MRK  ) are down 0.4%, likely because of an analyst downgrade at Jefferies. The firm lowered its rating on the stock from buy to hold and cut its price target on the stock from $53 to $50. Jefferies said deteriorating business fundamentals and a smaller-than-expected cost-cutting program were two of the main reasons for the change. Just recently Merck announced that it will restructure and cut $2.5 billion in expenses over the next few years. 

Another Dow component likely also falling lower because of an analyst change is Coca-Cola (NYSE: KO  ) , down 0.26% after Wells Fargo cut Coke's price target from the $45 to $47 range to between $41 and $43. The reasoning given was the belief that the beverage industry will likely see lower volume in the future due to pressure from health-conscious consumers.  

Jefferies' downgrade of Merck is just another recent analyst proclamation regarding the stock: On Wednesday we saw Credit Suisse open coverage on the stock with a "neutral" rating. And while Wells Fargo's Coke markdown is one of the more recent analyst moves pertaining to the company, it is based on old news: Volumes are down, and people aren't drinking as much soda. My point is that these rating changes happen all the time, and investors shouldn't get too caught up in them. Instead, they should be studying the companies' business models and financials before making a buy or sell decision.

A Deeper Foolish Perspective
The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2678986, ~/Articles/ArticleHandler.aspx, 9/29/2016 7:56:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:35 PM
^DJI $18143.45 Down -195.79 -1.07%
KO $42.03 Down -0.12 -0.28%
Coca-Cola CAPS Rating: ****
MRK $61.91 Down -1.39 -2.20%
Merck and Co. CAPS Rating: ****