Merck Boosted by Strong Cancer Drug Pipeline Despite Patent Cliff

Morgan Stanley has upgraded Merck Group to Overweight and raised its price target to $179 from $116, citing the company's strong cancer drug pipeline as a key factor.

The upgrade comes after Merck shares have already gained 45% this year, driven by positive clinical-trial results and strong sales of Keytruda, the company's top-selling cancer medication.

The analysts at Morgan Stanley believe that while the patent expiration for Keytruda may be a concern, it is not as big a threat as previously thought, given Merck's robust pipeline of new treatments.