Cantor Fitzgerald sets Merck stock Neutral with $85 price target

Tuesday, Cantor Fitzgerald began coverage on Merck (NYSE:MRK) shares with a Neutral rating and an $85.00 price target. The firm’s analysis highlighted Merck’s performance challenges over the past year, noting a 37% decline compared to the broader biotech index’s 14% drop. According to InvestingPro data, Merck is currently trading near its 52-week low of $75.93, though the company maintains a "GREAT" financial health score and trades at an attractive P/E ratio of 11.4x. The assessment pointed to a recalibration of expectations for Gardasil in China, which brought the company’s reliance on Keytruda and its post-2028 growth potential into sharper focus.

Merck’s stock has struggled amid concerns over its growth sustainability after 2028, as its blockbuster cancer drug Keytruda faces the end of its exclusivity period. Cantor Fitzgerald’s report emphasized the company’s efforts to mitigate the loss of exclusivity (LOE) impact through its pipeline, including potential launches of subcutaneous Keytruda by the end of 2025. However, the firm anticipates a mid-single-digit decline in top-line revenue from 2028 to 2034, even when considering contributions from its developmental drugs for various conditions.

The firm also mentioned several potential near-term risks for Merck, including pricing pressures from Medicare Part B Inflation Reduction Act guidance and tariffs, competition from ivonescimab in first-line non-small cell lung cancer, and the critical CADENCE dataset that is vital for the growth of Winrevair, a treatment for pulmonary hypertension. Despite these challenges, Cantor Fitzgerald acknowledged Merck’s meaningful growth drivers, such as its diverse drug portfolio in development, which includes treatments for hypercholesterolemia, inflammatory bowel disease, respiratory syncytial virus, HIV, and a TROP2 antibody-drug conjugate.

The analysis by Cantor Fitzgerald suggests caution due to the various risks and uncertainties facing Merck, particularly regarding Keytruda’s future pricing and the competitive landscape. The firm’s initiation of coverage with a Neutral stance reflects a wait-and-see approach to Merck’s ability to navigate these challenges and capitalize on its pipeline to drive future growth. InvestingPro analysis indicates the stock is currently undervalued, with analyst targets ranging from $85 to $146 per share. For deeper insights into Merck’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s fundamentals and future potential.

In other recent news, Merck & Co. Inc. has been the focus of several significant developments. UBS analysts have maintained a Buy rating for Merck with a price target of $105, noting a decline in HPV 9 vaccine approvals in China but a significant increase in HPV 2 vaccine approvals. Goldman Sachs also initiated coverage on Merck with a Buy rating, adjusting the price target to $103, citing undervaluation of the company’s Animal Health division and potential growth in its pipeline. Additionally, Merck announced promising results from the Phase 3 ZENITH trial of WINREVAIR, demonstrating a 76% reduction in major morbidity and mortality events in pulmonary arterial hypertension patients. The trial was stopped early due to overwhelming efficacy, and WINREVAIR is now being offered in an open-label extension study. Meanwhile, President Donald Trump’s announcement of impending tariffs on pharmaceuticals has raised concerns about potential cost increases and supply chain disruptions for companies like Merck. UBS anticipates that Merck’s upcoming financial report may face negative reactions due to low market sentiment, but they also highlight upcoming events that could shift investor interest. These developments suggest a complex landscape for Merck, with both challenges and opportunities on the horizon.

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