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There's a debate breaking out over how much Merck's new cholesterol drug will help the stock

  • Merck announced the results of a study for its cholesterol drug, Anacetrapib.
  • Shares of the pharmaceutical company climbed in premarket trade but then reversed when official trading began.
Kenneth Frazier, CEO of Merck.
Mark Neuling | CNBC
Kenneth Frazier, CEO of Merck.

Merck said Tuesday its cholesterol drug Anacetrapib met its primary goal in a study, significantly reducing coronary heart disease.

Shares of the pharmaceutical company struggled for gains morning trade, after spiking more than 3 percent in premarket trade.

Results of the study on 30,000 individuals will be presented on Aug. 29 at a European Society of Cardiology meeting.

Merck 2-day performance

Source: FactSet

Merck said in a press release that it plans to review the trial results with outside experts and will consider whether to file a new drug application with the U.S. Food and Drug Administration, among other regulatory agencies.

The study's positive result generally surprised stock analysts, but they had mixed forecasts on how much it would help Merck shares.

"The cautious language in the release indicates an unclear risk:benefit in our view, which investors should pay attention to. We believe that only a 2% move in mid term EPS and valuation is warranted at this time and remind investors of the bigger risks around [lung cancer drug] Keytruda expectations, which remain too high in our view," Jefferies analyst Jeffrey Holford said in a note. He has an underperform rating on Merck.

BMO Capital Markets' Alex Arfaei also said the release's wording suggests the study results "may not be very clinically meaningful" and "may not justify the safety issues." However, Arfaei noted that expectations for the drug are "very low" and maintained his outperform rating on the stock. "We believe the franchise could reach global sales of $1.5-2Bn," he said.

Merck shares are up nearly 12 percent year-to-date. Analysts said earlier this month the results of this study would be the next major catalyst for the Dow Jones Industrial average member.

— CNBC's Meg Tirrell contributed to this report.