On Tuesday, Bernstein SocGen Group maintained its Market Perform rating and $110.00 price target for Merck (NS:PROR) & Co., Inc. (NYSE:MRK) shares following the pharmaceutical giant's announcement to halt two of its oncology programs.
The discontinued programs, KeyVibe (Keytruda/anti-TIGIT) and KeyForm (Keytruda/anti-LAG3), were exploring the combination of two immunooncology agents to potentially enhance patient survival across various cancer types.
The decision to discontinue these programs comes after several months of emerging safety concerns, particularly with the TIGIT combinations, and a history of unsuccessful immunooncology (IO/IO) combinations.
Bernstein had previously predicted that these trials would not result in commercially viable products, and thus the analyst confirmed that no changes to their financial model for Merck are necessary due to this recent development.
Currently trading near its 52-week low of $94.48, Merck's stock has shown historically low price volatility, making it an interesting prospect for value investors. InvestingPro analysis suggests the stock may be undervalued at current levels.
According to the analyst, the evidence suggesting potential issues with the programs had been apparent for some time, as indicated by Exhibit 1 in their research. This exhibit likely detailed the challenges and lackluster results associated with IO/IO combinations in the field of oncology.
Merck's press release officially announcing the termination of the KeyVibe and KeyForm programs marks a conclusion to the company's efforts in these specific areas of cancer treatment research. Despite this setback, the analyst's outlook on Merck's stock remains unchanged, indicating that the market had already accounted for the possibility of these programs not achieving commercial success.
Investors and stakeholders in Merck can take note that Bernstein's assessment of the company's stock potential remains consistent, with the Market Perform rating suggesting that the stock is expected to perform in line with the market or sector averages in the near future. The company maintains a strong dividend profile, having raised its dividend for 14 consecutive years with a current yield of 3.24%.
For deeper insights into Merck's financial health and growth prospects, including 12 additional ProTips and comprehensive valuation metrics, visit InvestingPro.
In other recent news, pharmaceutical giant Merck has received significant attention for advancements in its oncology portfolio. The company's KEYTRUDA has gained new approval in China for early-stage non-small cell lung cancer treatment, marking the fourth such indication for the drug in the country.
Moreover, Merck's investigational drug, sacituzumab tirumotecan, has been granted FDA Breakthrough Therapy designation for treating certain patients with advanced lung cancer and received its first marketing authorization in China for treating specific cases of breast cancer.
Merck's financial performance has seen mixed analyst responses. HSBC upgraded its rating for Merck from Hold to Buy, citing confidence in the company's ability to manage loss of exclusivity challenges.
However, Bernstein SocGen Group adjusted its outlook on Merck, reducing the price target due to concerns over the performance of Gardasil, Merck's HPV prevention vaccine, in China. Despite this, Merck reported a 4% increase in third-quarter revenue for 2024, reaching $16.7 billion.
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