UBS maintains Merck stock Buy rating and $105 target

Thursday, UBS analysts maintained their Buy rating and $105.00 price target for Merck (NSE:PROR) & Co. Inc. (NYSE:MRK) stock. The firm’s analysis indicated a persistent decline in the company’s Human Papillomavirus (HPV) 9 vaccine batch approvals in China, with a year-over-year decrease of 57% for the quarter. This trend was anticipated and is consistent with recent channel checks that have revealed high inventory levels of the HPV vaccine.

Despite the overall decline, UBS noted a slight increase in approvals during March, which came after a significant drop in February. This March uptick offers a glimmer of encouragement against the backdrop of a challenging economic environment in China. With Merck’s impressive gross profit margin of 77.09% and robust dividend yield of 4.24%, InvestingPro subscribers can access detailed analysis of the company’s financial strength through comprehensive Pro Research Reports, available for over 1,400 US stocks. Analysts from UBS highlighted that while the HPV 9 vaccine approvals have decreased, there has been a significant increase in the approvals for HPV 2 vaccines in the first quarter of 2025, with a growth rate of 211% year-over-year.

The rise in HPV 2 vaccine approvals may indicate a shift towards more affordable domestic vaccines, which provide coverage against fewer serotypes. The change in consumer preference could be a response to the economic pressures faced by many in China. UBS’s commentary suggests that while Merck’s HPV 9 vaccine faces hurdles, there is potential for a change in the market dynamics due to the cost-sensitive nature of consumers.

Merck’s performance in the HPV vaccine market is a point of focus for investors, as vaccine approvals are a critical factor for the company’s revenue stream in the Chinese market. The detailed observations by UBS analysts provide a nuanced view of the current state of Merck’s vaccine business within this specific segment.

The maintained Buy rating and price target by UBS reflect the firm’s ongoing confidence in Merck’s stock, despite the noted challenges in the HPV vaccine approval rates. The analysts’ comments underline the complexities of the pharmaceutical market in China, especially in relation to vaccine production and approval. Investors should note that Merck will report its next earnings on April 24, 2025, providing crucial insights into the company’s performance. InvestingPro offers additional valuable metrics and 10 key investment tips that can help investors make informed decisions about Merck’s stock.

In other recent news, Merck & Co., Inc. has been at the center of several significant developments. The company unveiled promising results from its Phase 3 ZENITH trial for WINREVAIR, which showed a 76% reduction in risk for major morbidity and mortality events in patients with pulmonary arterial hypertension. In the realm of analyst ratings, Goldman Sachs upgraded Merck’s stock to a Buy with a revised price target of $103, citing undervaluation and the strength of its Animal Health division. UBS also maintained a Buy rating with a $105 price target, though it expressed concerns about optimistic sales estimates for Merck’s Gardasil vaccine in China.

Meanwhile, the pharmaceutical sector faces potential disruptions due to President Donald Trump’s announcement of impending tariffs on the industry. This has led to increased shipment activity by European drugmakers to the U.S. as a precautionary measure. Merck, along with other major pharmaceutical companies, could be affected by these trade policies, which aim to encourage domestic production. These tariffs have raised concerns about potential impacts on global supply chains and profitability. As these developments unfold, investors are closely monitoring the implications for Merck and the broader pharmaceutical industry.

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