Merck Stock Soars as Analysts Debate Post-Keytruda Growth Path

Morgan Stanley has upgraded Merck's stock to Overweight after positive Phase 3 data for its personalized melanoma vaccine, intismeran autogene, strengthened confidence in the company's post-Keytruda growth path. The analyst firm raised its price target to $89 from $39 and increased the valuation multiple it applies to the stock to 17 times earnings from 11 times.

Morgan Stanley's Terence Flynn argues that Merck is better positioned to navigate Keytruda's 2028 patent cliff, which had previously been a concern for investors. The firm also cited stronger assumptions for intismeran and encouraging prospects for sac-TMT, an antibody-drug conjugate being studied in lung and endometrial cancers.

RBC Capital Markets took the opposite view, downgrading Merck to Sector Perform from Outperform despite raising its target to $150 from $142. Analyst Trung Huynh argued that the valuation already reflects much of the pipeline optimism and called the setup an 'unprecedented valuation for a company facing a significant LOE in 2 years and modest interim growth.'

Investors are now looking to additional sac-TMT data and readouts for tulisokibart, including an October update and further results later this year. If those programs deliver, Morgan Stanley's argument for a post-2029 return to growth becomes more credible.