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

Shares of catalyst-rich pharma Merck & Co., Inc. 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 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 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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