By Lewis Krauskopf

NEW YORK (Reuters) - A 50 percent plunge in shares of Schering-Plough Corp this year has lured value hunters who call the sell-off overdone over its flagship cholesterol medicines, Vytorin and Zetia, and see appeal in a new acquisition and the company's pipeline of new drugs.

Another silver lining in the stock drop: The company's cut-rate market value makes it takeover bait.

Its shares climbed more than 11 percent on Thursday to $15.40 after Schering-Plough (SGP.N: Quote, Profile, Research) late Wednesday unveiled a program to cut costs by about $1.5 billion a year.

But that is a far cry from where it was just months ago, or even last week. Shares are still off 42 percent this year, driven down by a study that found Vytorin failed to reverse the progression of heart disease better than Zocor, an older drug available as a cheaper generic. Vytorin combines Zetia with Zocor.

In fact, the situation became more dire for Schering on Sunday when an expert panel recommended doctors use Vytorin and Zetia only after trying other cholesterol medicines, further hurting shares of Schering and its partner on the drugs, Merck & Co. (MRK.N: Quote, Profile, Research)

Some investors and analysts argue Schering shares have fallen too far, noting the company's line-up of new drugs that could reach the market and a strong patent position on existing medicines relative to other drugmakers. Those factors, combined with the low valuation, are reviving takeover talk for the New Jersey-based company.

"Our view is the reaction to the Vytorin news has been dramatically overdone," said Chris Armbruster, an analyst with Al Frank Asset Management. "As value guys, we like to do the three-to-five-year outlook for these companies, and we think buying it now you'll be happy that you did a couple years out."

Armbruster, who likes Schering Chief Executive Fred Hassan and applauds its recent deal for Dutch drugmaker Organon, said his firm would buy the stock until it reaches $18 a share and projects it will reach $29 in the next three to five years.