In a report published Thursday, Bank of America analyst Colin Bristow reiterated a Buy rating on Merck & Co. MRK, and raised the price target from $62.00 to $65.00.
In the report, Bank of America noted, “We are increasing our MRK PO to $65 (from $62) based on higher sales estimates for MRK's Hepatitis C (HCV) pipeline and pembrolizumab. Recall on 6/9, MRK announced plans to acquire IDIX for $3.85bn, with the primary driver of the acquisition being IDIX's nucleotide prodrug (‘nuc'), IDX21437. We believe IDX'437 significantly increases MRK's competitive positioning and are therefore increasing our peak HCV sales estimates to $2.5bn (from $1.5bn), which could still prove to be highly conservative given the potential size of the market (we estimate $12bn+) and the fact that IDX'437 could give MRK a best-in-class regimen.
"In addition, we are increasing our pembrolizumab peak sales estimate to $3.5bn (from $3bn) following multiple positive data readouts for PD-1/PD-L1 assets in new tumor types (head and neck, bladder, ovary) at ASCO. We reiterate our Buy rating and $65 price objective. Key near-term catalysts for MRK include: 1) the ESMO conference (Sep 26-30 - likely additional PD-1 readouts), 2) Pembro PDUFA in melanoma (10/28/14), and 3) AASLD – HCV updates (Nov 7-11).”
Merck & Co. closed on Wednesday at $58.81.
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