UPDATE: BMO Capital Markets Reiterates Market Perform Rating, Raises PT on Merck & Co.
In a report published Monday, BMO Capital Markets reiterated its Market Perform rating on Merck & Co. (NYSE: MRK), and raised its price target from $46.00 to $50.00.
BMO Capital noted, “Given all the headwinds Merck is facing, this was an impressive quarter. Excluding the Singulair patent expiration and negative Fx impact, Merck grew revenues 7% y/y. Many of the growth drivers, such as the Januvia and vaccines franchises, have long patent lives; thus, once the impact of Singulair wears off in 2013, Merck's revenues should return to growth, which coupled with an improved cost structure should lead to higher EPS growth. In the meantime, the pipeline is advancing well. In short, Merck is effectively executing its strategy. The key risk is potentially negative results from the IMPROVE-IT trial, likely in 2014, which could lower sales of the $4.3B Zetia/Vytorin franchise until loss of exclusivity in 2017. However, by that time Merck's late-stage pipeline (e.g. Odanacatib) should dampen the impact, and the focus should shift to the potentially transformative late-stage products, like Anacetrapib and the BACE inhibitor in Alzheimer's.”
Merck & Co. closed on Friday at $46.15.
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