The pharmaceutical company should bounce as it just signed an agreement with Pfizer and Broad Institute for a research project to reduce the likeliness of inflammation of the kidney on lupus patients.

Company’s sales are awaited at higher levels than those registered in prior year for an increase of almost 5%, at the same time better margins are previewed at 12.8% for 2014 and 13.2% for the next period. These two significant improvements should mean a key point for making better earnings as they are anticipated at €1.4 billion for the current year and almost €1.5B for 2015. In fact, revisions on EPS made by analysts polled by Thomson-Reuters have been continually upgraded during the last twelve months, now anticipated at €6.13 per share from €5.34 by April 2013.

With this new agreement and the new edition of its EMD Serono Specialty Digest, Merck shares are ready for upturn from its short term bearish trend and thus reach its previous trading range. Even if part of the breakaway gap from January 27 has been already fulfilled, there is still a big stake that could be completed in the future to come. According to technical patterns the stock would inverse the tendency in coming sessions targeting the EUR 127 resistance in a first stage, further higher levels could be attained once this resistance broken.

Considering fundamental and technical analysis, shareholders could place themselves buyers on Merck in order to profit from the shift, seeking for the EUR 127 target (with a first goal at EUR 122.9). The stop-loss order would be placed below the support at EUR 111.8.