(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Merck & Co. Inc.'s (MRK) stock has had a rough three years with shares rising by a little more than 4%, versus an S&P 500 that has climbed by nearly 27%. But a technical analysis of the stock's trading patterns suggests shares of the stock could be about to surge higher, by roughly 10%, and reaching prices not seen since mid-2017. 

The number of bullish analysts has been rising since the middle of December, and they have also been boosting their price targets of the stock as well. The average price target on the stock is $67.68, nearly 12% higher than the stock's current price around $60.30. They have also been busy upping their revenue and earnings estimates for 2018. 

MRK Chart

MRK data by YCharts

Strong Technical Chart

The technical chart shows a stock that appears to have put in a solid bottom and could be headed back to its old high around $66.50 per share, a jump of about 10.8%. The chart shows a solid uptrend that has been in place for Merck since 2009—a decade-long uptrend. The chart also indicates that the stock has been able to rise above a multi-month downtrend since mid-2017. With the stock rising above that downtrend, it may clear a path for shares of Merck to increase back to previous highs around $66.50. 

Bullish Analysts

Analysts have also become increasingly more bullish on shares of the stock in recent weeks, with 74% of the 23 analysts covering the stock rating it a "buy" or "outperform," that is up from only 57% in the middle of December. Additionally, analysts have also upped their average price target on the stock by nearly 4% to $67.68 per share, based on data from YCharts. Goldman Sachs was the latest, adding Merck to its conviction buy list with a $73 price target on Monday, April 23. (For related reading, see also: Merck Bumps Its Dividend Higher.)

MRK Outperform Recommendations Chart

Strong Earnings

Analysts are looking for Merck to report that first-quarter earnings climbed by 13%, while revenue is forecast to grow by nearly 7% when the company reports results on May 1. The estimates for the upcoming quarter have been steadily rising, with earnings estimates rising almost 5.25% since the start of 2018 to $1.00 per share, while revenue estimates have jumped by over 3.5% to $10.09 billion, on the strength of it cancer drug Keytruda. (For more, see also: Merck Reveals 7-Year Price Hike History.)

MRK Revenue Estimates for Current Quarter Chart

Merck's stock has a long way to go to catch up to the stock market's broader run over the past three years, but at least for now the outlook is looking more bullish than previously. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdingsInformation presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.