Credit Suisse Believes In This Pharma Giant's Low Risk Growth Against Uncertain Backdrop

Credit Suisse has initiated coverage on Merck & Co Inc MRK with an Outperform rating and a price target of $120.
The analysts note that Merck's high, consistent earnings growth, which is considerably above peers, should be the key to outperformance over the next few years.
The firm believes the growth is low risk, with drivers Keytruda and Gardasil well established and less affected in the near term by healthcare reforms under the Inflation Reduction Act (IRA) than peers.
Related: Merck Clocks More Than 50% Drop In COVID-19 Treatment Sales, Revises Annual Guidance.
Credit Suisse acknowledges the Keytruda loss of exclusivity (LOE); however, in the current uncertain climate, but thinks low-risk, high short-term growth is more important.
The current valuation of 13.5x can reach 16x, similar to peers, as new management aggressively reinvests cash flows in internal R&D and value-enhancing M&A to help offset Keytruda's patent cliff.
The analysts' sales estimates are 5% above the consensus by 2028, driven by Keytruda.
Price Action: MRK shares are up 1.45% at $103.79 on the last check Friday.

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