Barclays upgrades Merck on April 5
On April 5, 2018, Barclays (BCS) updated its recommendation for Merck (MRK) to “overweight” from “equal weight,” and Barclays analyst Geoff Meacham raised its target price from $62 to $64. Merck stock rose ~1% during the day but closed April 5 ~0.02% lower.
Analyst’s rationale on upgrade
According to Meacham, there is a potential to grab a ~15%–20% market share of the US first-line lung cancer treatment market. He expects Merck to continue to hold a higher market share, driven by positive data from its clinical trials. The success of the company’s Keytruda Phase 3 study trial, which we discussed in the previous part of this series, boosted the company’s stock price. Also, Meacham believes that Merck has a better outlook than competitors, primarily Bristol-Myers Squibb (BMY). Over the years, Merck has been better positioned in the first-line lung cancer market than Bristol-Myers Squibb.
Wall Street analysts’ recommendations on MRK stock
Of the 21 analysts covering MRK stock on April 10, 2018, 14 (~67%) recommended “buy” or “strong buy,” and seven (~33%) recommended “hold.” There were no “sell” recommendations. Analysts’ average 12-month target price for MRK stock is $66.55, which implies a ~16.7% return over the next 12 months based on its closing price of $56.16 on April 9.
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