Merck's stock is expected to rise following an upgrade from Morgan Stanley, which has shifted its rating from equal weight to overweight. The investment bank increased its price target for Merck shares from $116 to $179, reflecting a 17% upside from the stock's closing price on Wednesday.
Analyst Terence Flynn expressed optimism about Merck's pipeline, which includes promising candidates like intismeran autogene and sac-TMT for oncology, as well as tulisokibart for inflammatory bowel disease.
Despite concerns regarding the expiration of Keytruda's patent in 2028, Flynn believes that Merck can mitigate potential losses by developing co-formulations of Keytruda, thereby extending its market presence.
Merck's strong performance is underscored by over $16 billion in sales from Keytruda in the first half of the year and positive results from late-stage trials in collaboration with Moderna, which led to a 13% surge in stock price on Wednesday.
Overall, Morgan Stanley's outlook aligns with the broader consensus on Wall Street, where 24 out of 32 analysts recommend buying or strongly buying Merck shares