Merck stock (NYSE:MRK) edged up slightly in early trading on Wednesday after Bank of America raised its rating from Neutral to Buy, arguing that the pharmaceutical company is likely to maintain its strong growth momentum through 2022 despite measures to reduce reliance on its cancer drug Keytruda.
Indeed, the analysts said, “Merck’s steady revenue potential should be highly valued, in our view, at a time where the macro environment could remain uncertain throughout most of 2023.” They increased the price objective on the stock to $130 from $110 per share.
Keytruda’s potential for concentration risk, according to the team led by Geoff Meacham, is still “a big bear argument” given that the PD-1 inhibitor is anticipated to account for more than 45% of the company’s total revenue by 2025.
They do, however, highlight encouraging outcomes from Keytruda combo trials, solid data for the firm’s sotatercept candidate for pulmonary arterial hypertension (PAH), and Merck’s (MRK) business development initiatives to include antibody-drug conjugates.
Meacham and analysts point out that, given the company’s diversified/sustainable revenue growth, robust cash flow generation, and chance to expand operating margins above expectations, the company’s valuation based on 2023 earnings “isn’t heroic.”
Geoff Considine, a writer for Seeking Alpha, had similar opinions on Merck last month, saying the business is “poised to outperform in 2023.”
Merck Stock Outlook
The S&P 500’s top-performing drugmaker in 2022 was Merck & Co., which saw its highest yearly return in more than 20 years as investors rewarded the business for solid earnings and encouraging clinical trial results. The maker of the popular cancer medication Keytruda and HPV vaccine Gardasil received a boost from the company’s strong earnings reports, and the stock has increased by 45% this year and is trading close to a record high level. It made billions of dollars with the Covid-19 medication Lagevrio, and China this week licensed the antiviral for use in emergency situations.
Positive clinical updates have also benefitted Merck. Keytruda and Moderna Inc.’s cancer vaccine were shown to cut melanoma fatalities in a trial earlier this month, and sotatercept, an investigational treatment for pulmonary arterial hypertension, successfully completed its primary objective in a late-stage trial in October. With little apparent return potential for the following year, the stock’s rise this year has brought it close to the average 12-month target price of analysts, according to Bloomberg data. However, some still see an opportunity. This week, analysts at Cantor Fitzgerald picked Merck as one of the best large-cap pharmaceutical stocks to buy for 2023. The stock was designated a “favored choice” for the coming year by Mizuho Securities as well. More on Yahoo News.
Merck Stock Flattens As Ranked The Best-Performing Major American Pharmaceutical In 2022
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