Citi upgrades Merck, says the pharma giant’s drug pipeline is underappreciated
Citi is bullish on Merck , saying that the corporate’s drug pipeline is underappreciated by the market. Analyst Andrew Baum upgraded the pharmaceutical big to purchase from impartial. He additionally hiked his value goal to $130, which means 14% upside from Wednesday’s shut value. The financial institution mentioned Merck’s newly acquired portfolio of ADC , or antibody drug conjugate, from China-based Kelun-Biotech helps the corporate in “future-proofing” its oncology and hematology pipeline. The unique license and collaboration settlement for ADC improvement helps Merck in creating extra most cancers remedy medication — and Citi thinks it may rival its opponents’ choices. “Merck’s TROP2 ADC is a materially under-appreciated competitor to AZN/DS dato-DXd,” Baum wrote in a Thursday be aware, referring to AstraZeneca and Daiichi Sankyo’s lung most cancers drug at the moment in improvement. Baum added that “the medical information from early Chinese language trials [of TROP2 ADC] seems to be broadly comparable and even superior to dato- DXd and superior to Gilead’s Trodelvy.” Citi anticipates additional upside for Merck shares from the Inflation Discount Act. The agency believes sotatercept, Merck’s pulmonary arterial hypertension remedy at the moment in late-stage improvement, “is the only largest beneficiary of the lately enacted IRA within the US.” To make certain, Baum famous a key draw back danger to his valuation is that if the ADC pipeline disappoints. Additional dangers embody lower-than-anticipated worth share seize by the corporate’s Melanoma remedy drug Keytruda, and a slowdown in its animal well being enterprise. Shares of the drug firm had been up greater than 1% earlier than the bell. Shares have risen simply 2.5% in 2023, however have soared 32% over the previous 12 months MRK 1Y mountain Merck & Co inventory —CNBC’s Michael Bloom contributed to this report.