On Thursday, Bernstein maintained its Market Perform rating on shares Merck (NS:PROR) & Co. Inc. (NYSE:MRK) with a steady price target of $110.00. Merck recently announced the global in-licensing of an oral GLP1 agent from Hansoh Pharma, which aligns with the company's strategy of focusing on earlier-stage, cost-effective opportunities, particularly in China.
Merck's move to in-license this agent is part of its broader aim to enhance its cardiovascular portfolio. With a solid revenue growth of 6.51% and maintaining a stable 3.29% dividend yield, the company continues to demonstrate financial strength. Dean Li from Merck highlighted the potential benefits of the new agent for cardiometabolic health, extending beyond obesity treatment.
However, Bernstein pointed out that despite the positive addition to Merck's cardiovascular offerings, the timing presents challenges. The competitive obesity market and the upcoming low-revenue years for Merck could affect the product's impact.
The product in question is expected to face stiff competition as it enters a market with several other oral GLP1 agents at various stages of development. Bernstein notes that this new product from Merck is likely to trail behind competitors such as Orforglipron by Eli Lilly (NYSE:LLY), Danuglipron by Pfizer (NYSE:PFE), CT-966 by Roche, and VK2735 by Viking, which are all in different phases of clinical trials.
Bernstein's reiteration of the Market Perform rating suggests that while the licensing deal is a strategic move for Merck, the analyst firm anticipates that the immediate market conditions and competition may not significantly alter the company's short-term prospects.
The $110.00 price target reflects this outlook, though InvestingPro's Fair Value analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report covering this prominent pharmaceutical player. The stock's low volatility (Beta: 0.4) may appeal to stability-focused investors.
In other recent news, Merck & Co., Inc. announced positive results from two pivotal Phase 3 trials for its investigational HIV-1 treatment regimen, doravirine/islatravir (DOR/ISL), meeting primary efficacy endpoints.
In other developments, Merck entered a licensing agreement with Hansoh Pharma for the development of HS-10535, a preclinical oral small molecule with potential applications in cardiometabolic diseases. The deal involves an upfront payment of $112 million from Merck to Hansoh Pharma, with potential milestone payments reaching up to $1.9 billion.
BMO Capital maintained its Outperform rating on Merck shares following the strategic move, while Bernstein SocGen Group maintained its Market Perform rating despite the company's decision to halt two oncology programs. Merck's third-quarter revenue for 2024 increased by 4%, reaching $16.7 billion, driven by strong sales of its cancer drug KEYTRUDA and the introduction of WINREVAIR.
These recent developments demonstrate Merck's continued commitment to expanding its research and development pipeline and addressing unmet medical needs. The company's robust financial health, reflected in its consistent revenue growth and dividend yield, supports its ongoing research initiatives. These are the recent developments from Merck's operations.
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