Wolfe Research: Merck & Co., Inc. (MRK.US) has a solution to the "patent cliff" for Keytruda, raising its rating to "outperform the market".

Investment bank Wolfe Research has upgraded its rating on Merck & Co., Inc. (MRK.US) from "in line with peers" to "outperforming the market", with a target price of $135. Analyst Alexandria Hammond stated that Merck & Co., Inc. is in a favorable position in addressing the upcoming loss of market exclusivity for its blockbuster cancer drug Keytruda's intravenous version. Based on feedback from doctors, analysts project that by 2029, Merck & Co., Inc. will convert 41% of Keytruda's intravenous version revenue to its newly approved subcutaneous version Qlex. As a result, the revenue forecast for the Keytruda product line in 2030 has been raised by $6 billion above market expectations. Additionally, analysts believe that with recent acquisitions including the purchase of antiviral drug developer Cidara Therapeutics, Merck & Co., Inc. is in a catalytic phase and is expected to achieve breakthrough performance with acquisitive growth driving enhanced earnings. It is worth mentioning that reports indicate that Merck & Co., Inc. is in talks to acquire the oncology-focused biotechnology company Revolution Medicines (RVMD.US). According to sources familiar with the matter, the discussed transaction price is between $28 billion and $32 billion. If the deal goes through, it would be one of the largest pharmaceutical industry transactions since Pfizer Inc.'s $43 billion acquisition of Seagen at the end of 2023. Since 2021, Merck & Co., Inc. has nearly doubled its late-stage product pipeline through internal development and large transactions (such as the $11.5 billion acquisition of Acceleron's pulmonary arterial hypertension drug Winrevair). The deal with Revolution Medicines could provide Merck & Co., Inc. with their experimental drug Daraxonrasib. In addition, Wolfe Research has downgraded its rating on AbbVie (ABBV.US) from "outperforming the market" to "in line with peers", while also canceling the previously given $275 target price for the stock. Analysts believe that the company's stock price already fully reflects the excellent performance of its new generation immunology products Skyrizi and Rinvoq. Following the patent cliff for the arthritis blockbuster drug Humira, these two products have become the dominant forces in AbbVie's immunology and inflammation product portfolio.