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Merck Analyst Raises Price Target Ahead Of Upcoming Antiviral Trial Results, Presentation

Merck Analyst Raises Price Target Ahead Of Upcoming Antiviral Trial Results, Presentation

Shares of catalyst-rich pharma Merck & Co., Inc. (NYSE: MRK) are poised for further upside, according to an analyst at SVB Leerink.

The Merck Analyst: Daina Graybosch maintained an Outperform rating on Merck and increased the price target from $95 to $100.

The Merck Thesis: Merck shares are likely to move in the near-term, as results from a pair of Phase 2 trials of the MK-4482 antiviral in patients with COVID-19 is scheduled to be released in the coming weeks, Graybosch said in a Tuesday note. (See her track record here.)

MK-4482, which is being developed in partnership with Ridgeback Therapeutics, could become the third therapy approved for emergency use after Gilead Sciences, Inc.'s (NASDAQ: GILD) remdesivir and convalescent plasma, the analyst said.

MK-4482 has the potential for positive differentiation in stage of use and route of administration, as well as broader antiviral activity, she said.

Although MK-4482 is likely to have only a small impact on Merck's valuation — potentially around $3-$4 per share — positive news could bring more attention and investors to Merck's story, Graybosch said.

The pharma's presentation of vibostolimab and Keytruda data in non-small cell lung cancer at the European Society of Medical Oncology on Sept. 17 could signal its competitive stance relative to Roche Holdings AG Basel ADR Common Stock (OTCQX: RHHBY) unit Genentech's tiragolumab + Tecentriq combination, the analyst said.

"This is another good example of life-cycle management possible with next-generation combination on top of Keytruda that could protect the franchise from biosimilar risk post-2028." 

SVB Leerink's price target increase reflects the updated potential for vibostolimab and the continued competitiveness of Keytruda, especially in NSCLC, in the face of new entrants, Graybosch said.

Factoring in a less-than-feared impact of COVID-19 on Merck's operations, SVB Leerink increased its estimates for several other product lines, including Bridion and the vaccine business.

MRK Price Action: Merck shares were down 0.14% at $85.33 at the time of publication Tuesday. 

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Latest Ratings for MRK

Nov 2020BernsteinReinstatesOutperform
Oct 2020SVB LeerinkMaintainsOutperform
Oct 2020Truist SecuritiesInitiates Coverage OnBuy

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