UBS Downgrades Merck KGaA to Neutral Over Rising Competition

Shares in Merck KGaA fell by 1.45% on Thursday after UBS downgraded its stock to 'neutral' from 'buy', citing a strong recent rally that has brought the valuation closer to fair value.

The Swiss bank, which maintains a price target of €150 per share, said its downgrade was driven by increasing competition in Merck's Healthcare division, particularly for Mavenclad and Ogsiveo.

UBS expects patent expiry pressure on Mavenclad to peak in 2027, while the launch of an Erbitux biosimilar from a rival company could create additional revenue pressure starting from 2030.

The bank also noted that varegacestat, a rival drug from another company, showed promising results in a Phase 3 study and has the convenience of once-daily dosing, which may affect Merck's sales prospects in the future.