UPDATE: Deutsche Bank Initiates Coverage On Merck

Deutsche Bank initiated coverage of Merck MRK with a Hold rating and price target of $63.

Analyst Gregg Gilbert outlined reasons for the initiation:

• Merck has established base businesses, with a track record of returning cash to shareholders.
• Merck has potential multi-billion dollar products in the pipeline awaiting completion of later stages of phase two and three trials.
• Merck is becoming well-positioned in the Hepatitis C (HVC) space with recent acquisition of Idenix IDIX. Gilbert stated,”Merck could differentiate itself with a product that is easier to use and has shorter treatment duration to gain market share.”

Analysts indicate upside risk will come from higher-than-expected peak sales for pembro and its HCV franchise.

Downside risks include approval delay for pembrolizumab in advanced melanoma or negative data from the C-SWIFT trial for HCV genotypes.