Merck & Co. (MRK) is a leading global drugmaker, producing a wide range of prescription drugs and vaccines in many therapeutic areas in the US and abroad. The US is MRK’s largest market, accounting for 47% of total revenue of $60.1 billion in 2023. Our view on shares of MRK remains at Buy, highlights Sel Hardy, analyst at CFRA Research.
In 2024, we think MRK will be better positioned again for healthier growth. We expect more visible contributions in 2024 from recently closed acquisitions and new product launches. We see strength in MRK’s cardiology and oncology portfolios, and the possibility of extending the use of Keytruda and Lynparza for a wider set of indications.
MRK successfully received FDA approval on March 26 for Winrevair, a promising medicine with solid growth prospects, in our view, to treat pulmonary arterial hypertension in adults, a serious and debilitating disease.
Merck & Co. (MRK)
Near term, we think MRK will benefit from its recent M&A. Acceleron Pharma boosted MRK’s presence in the expanding cardiovascular disease treatment market, while the Harpoon Therapeutics acquisition, closed in March, enhances and diversifies MRK’s oncology portfolio.
Our target price of $146, 15.3x our 2025 EPS view, is slightly above MRK’s historical forward P/E average. We find MRK attractive at current valuations and think the recent strategic M&A will accelerate the firm’s immunology and oncology pipeline.
Risks to our view and target price include increasing competition for key drugs, R&D pipeline failures and slower-than-expected development of new drug candidates, reduced market share for Keytruda and vaccines, and the potential for unfavorable US regulations on drug prices.
Recommended Action: Buy MRK.
